/biz/ - Business & Finance

Henlo frens. Ever wondered why LINK just keeps non-stop dumping over the last days? Dont worry, in this thread I explain to you what is going on.

In case you missed it, nearly 4 days ago the Harmony Horizon Bridge was haxxored.
https://governance.aave.com/t/harmony-horizon-bridge-exploit-consequences-to-aave-v3-harmony/8614
That resulted in some positions on AAVE being undercollateralized (eg 1USDC). Now AAVE assumes a 1:1 backing, so they report the collateral value (determined by Chainlink oracles) as the value of the position. You see where we are heading right? Suddenly positions with 1USDC, because Chainlink reports it has much less collateral, are assessed as being worth less than market value.
Now, on top of the missing collateral, the only logical thing happens: Arbitragers enter the game and deposit 1USDC (assessed by AAVE at below market price), and borrow assets that were not affected by the Horizon Bridge Exploit, in particular $LINK and $ONE token.
And apparently just not AAVE, but also other vendors are affected by this
>"In the mid term, we are researching into switching from our current ChainLink oracles to our previous onchain TWAP oracles, so prices can be accurate again allowing us to re-enable the borrow functionality."

See why the LINK price is doomping now? Because the arbitrageurs market-sell their arbed $LINK- and $ONE-tokens.