Aave community initiates proposal to freeze BUSD with Paxos’ halt of token minting imminent
Following Paxos move to halt minting BUSD, the Aave community has initiated a proposal to freeze its BUSD holding on Aave V2 Ethereum market.
The Aave community is currently considering a proposal to freeze the BUSD reserve on the Aave V2 market in light of Paxos’ move to stop minting BUSD.
BUSD issuer Paxos announced on Feb. 13 that it would cease minting BUSD from Feb. 21, 2023, but the token will remain fully supported by Paxos and redeemable to onboarded customers through at least February 2024.
Aave integration lead Marc Zeller has initiated a proposal to freeze the BUSD holding on Aave V2, as he believes the circulating supply of BUSD is expected to fall near zero over time, as there is no potential for BUSD to continue growing.
“It seems that the most reasonable path for Aave is to freeze this reserve and invite users to switch to another stablecoin among the diversity present in Aave,” Marc said.
Currently, about $11.57 million worth of BUSD is supplied on the Aave V2 Ethereum market, while about $10,500 BUSD is held in the DAO collector contract.
The proposal will undergo the standard governance process for the Aave community to vote on the optimal choice needed to preserve the DAO Treasury.
Following the Paxos-BUSD freeze, Binance CEO Changpeng Zhao said that his exchange might move away from using BUSD as the main trading pair if the issue persists.