Ethereum Updates: DeFi Faces Widespread Threats as Gauntlet Recommends Urgent Market Suspension
- DeFi firm Gauntlet proposes emergency pause of USDC/USDS/USDT borrowing on Ethereum's Compound v3 to prevent losses from Elixir's deUSD/sdeUSD collapse. - Stream Finance's $93M loss and xUSD's $0.24 plunge exposed systemic risks as Elixir tokens lost 70% value, triggering cross-protocol failures. - Critics warn the pause erodes trust, while Gauntlet stresses updated risk parameters are needed to stabilize artificially inflated oracle prices. - Recent Balancer's $100M exploit highlights compounding DeFi v
DeFi analytics company Gauntlet has
The urgency follows a
Gauntlet’s proposal draws attention to the systemic dangers of recursive DeFi tactics, where leveraged trades and unclear fund management can magnify risks. The firm pointed out that the price feeds for deUSD and sdeUSD were artificially high, enabling users to borrow against collateral at values well above the real market price—a major vulnerability that fueled the crisis. “Pausing these markets is the only way to stop further withdrawals that could destabilize the system, at least until governance approves new risk parameters,” a Gauntlet spokesperson said, as posted on the
This action has stirred discussion in the DeFi space. Many see the pause as a necessary safeguard, while some critics argue it could erode trust if prolonged. “Every hour these markets are frozen chips away at confidence in Compound’s liquidity assurances,” one forum user commented. Others stressed the importance of more rigorous collateral screening, especially for major stablecoin pools.
The incident highlights deeper weaknesses in DeFi’s rapid growth. Just days earlier, the automated market maker
Currently, the
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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