# \[ARFC\] Freeze BUSD on Aave V2 **URL:** \ **Category:** Governance\ **Created:** [February 13, 2023, 9:11am UTC](https://governance.aave.com/t/arfc-freeze-busd-on-aave-v2/11842 "2023-02-13T09:11:46Z")\ **Posts on this page:** 9\ **Page:** 1
**Author:** ![MarcZeller](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/marczeller/32/7124_2.png) [@MarcZeller](https://governance.aave.com/u/MarcZeller)\ **Post date:** [February 13, 2023, 9:11am UTC](https://governance.aave.com/t/arfc-freeze-busd-on-aave-v2/11842/1 "2023-02-13T09:11:46Z")
# [ARFC] Freeze BUSD on Aave V2 * * * title: [ARFC] Freeze BUSD on Aave V2 Author: @marczeller - Aave Chan Initiative Dated: 2023-02-13 * * * # **Summary** Following the recent developments between Paxos (minter of BUSD) and the SEC, Paxos will stop minting BUSD from April 2023 and will only allow redemption for their underlying value by burning BUSD. The circulating supply of BUSD will thus trend toward zero over time. This ARFC presents the Aave governance with the opportunity to freeze BUSD reserve on the Aave V2 Ethereum market. # **Abstract** This ARFC proposes to freeze the BUSD reserve on the Aave V2 Ethereum market. # **Motivation** While BUSD is not an asset with borrowing power, and recent development does not present risks of excess debt, From April 2023, the circulating supply of this asset will eventually go toward zero. As there’s no real prospect of growth and the inability to mint new BUSD might hurt peg arbitrage opportunity and asset peg. 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. As there’s no immediate risk for the protocol, the ACI doesn’t call for a fast-track process for this ARFC, and the standard governance process seems fit. # **Specification** Ticker: BUSD (BUSD) Contract Address: 0x4Fabb145d64652a948d72533023f6E7A623C7C53 # **Disclaimer** The Aave-Chan Initiative is not linked to nor paid by Binance/Paxos to publish this ARFC # **Copyright** Copyright and related rights waived via CC0, ---
**Author:** ![EzR3aL](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/ezr3al/32/10721_2.png) [@EzR3aL](https://governance.aave.com/u/EzR3aL)\ **Post date:** [February 13, 2023, 10:21am UTC](https://governance.aave.com/t/arfc-freeze-busd-on-aave-v2/11842/2 "2023-02-13T10:21:02Z")
In favour of this proposal, as there is for now, no more room for BUSD to grow it makes sense to freeze this asset. Also i would think about the aBUSD in the treasury, if it makes sense to swap them to another stablecoin on curve or buy back Aave from the market. Just to mitigate any future risk. Thanks Marc for bringing this ARFC so fast. ---
**Author:** ![MarcZeller](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/marczeller/32/7124_2.png) [@MarcZeller](https://governance.aave.com/u/MarcZeller)\ **Post date:** [February 13, 2023, 10:26am UTC](https://governance.aave.com/t/arfc-freeze-busd-on-aave-v2/11842/3 "2023-02-13T10:26:40Z")
I agree on swapping BUSD for another stable, but there’s no particular reason for a depeg under 1$ for BUSD (and even probability of a depeg \> 1$) So there’s no real rush for this. I think it’s most efficient to include this in one of the future treasury management AIP instead of creating a proposal just for this. Currently, the DAO collector contract holds ~10.5k$ worth of BUSD. ---
**Author:** ![Pauljlei](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/pauljlei/32/3488_2.png) [@Pauljlei](https://governance.aave.com/u/Pauljlei)\ **Post date:** [February 13, 2023, 6:05pm UTC](https://governance.aave.com/t/arfc-freeze-busd-on-aave-v2/11842/4 "2023-02-13T18:05:58Z")
Thanks, @MarcZeller, for bringing this to the forums quickly. Given the recent developments, Gauntlet agrees with freezing BUSD. ---
**Author:** ![WintermuteGovernance](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/wintermutegovernance/32/9926_2.png) [@WintermuteGovernance](https://governance.aave.com/u/WintermuteGovernance)\ **Post date:** [February 13, 2023, 11:49pm UTC](https://governance.aave.com/t/arfc-freeze-busd-on-aave-v2/11842/5 "2023-02-13T23:49:40Z")
Thanks @MarcZeller for putting this up quickly! We are in support. ---
**Author:** ![MarcZeller](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/marczeller/32/7124_2.png) [@MarcZeller](https://governance.aave.com/u/MarcZeller)\ **Post date:** [February 14, 2023, 8:22am UTC](https://governance.aave.com/t/arfc-freeze-busd-on-aave-v2/11842/6 "2023-02-14T08:22:59Z")
> [@MarcZeller](#): > > Paxos will stop minting BUSD from April 2023 and will only allow redemption for their underlying value by burning BUSD. Update: the information on the ARFC is incorrect and based on early information that was proven wrong. Paxos from [direct source](https://twitter.com/PaxosGlobal/status/1625091554951004161?s=20) will cease minting activity on BUSD from the 21st of Feb instead of April. While I still don’t think there’s a direct risk for the Aave protocol, if governance agrees, the ACI suggests escalating this proposal to the snapshot stage tomorrow with a direct open voting, and an aim to publish an AIP if the snapshot outcome is YAE during the weekend. This accelerated process would allow, assuming good sync, a potential execution of the freezeReserve() on Feb 23rd, two days after the minting cessation. Another option is going to the AIP stage without a snapshot vote, that option would potentially freeze BUSD in sync/before the minting stop by Paxos, but we have to share that as the protocol is not, particularly at risk, we’re not very keen to create precedence. So 3 options: 1. keep the standard process: execution if governance outcome is yes and good sync ETA for execution on Feb 26th 2. Direct to snapshot: ETA for Feb 23rd 3. direct to AIP: ETA for Feb 19th (two days before minting stop) The ACI is neutral on these options and will follow governance feedback, _Poll ([view on site](https://governance.aave.com/t/arfc-freeze-busd-on-aave-v2/11842/6))_ ---
**Author:** ![fig](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/fig/32/7063_2.png) [@fig](https://governance.aave.com/u/fig)\ **Post date:** [February 14, 2023, 3:27pm UTC](https://governance.aave.com/t/arfc-freeze-busd-on-aave-v2/11842/7 "2023-02-14T15:27:56Z")
We support this and commend a strong pulse on what is occurring in the ecosystem. Due to the updated timing of the minting controls, we support going direct to Snapshot - and voted accordingly in the poll above. ---
**Author:** ![MarcZeller](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/marczeller/32/7124_2.png) [@MarcZeller](https://governance.aave.com/u/MarcZeller)\ **Post date:** [February 16, 2023, 7:17am UTC](https://governance.aave.com/t/arfc-freeze-busd-on-aave-v2/11842/8 "2023-02-16T07:17:50Z")
following poll result proposal is now [live on snapshot.](https://snapshot.org/#/aave.eth/proposal/0x7fe7d372601aa2864cbe21071bd2fda10bf22aa8f66076db276818a2d6808bef) if the outcome is YAE, The ACI will publish an AIP next Monday. ---
**Author:** ![MarcZeller](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/marczeller/32/7124_2.png) [@MarcZeller](https://governance.aave.com/u/MarcZeller)\ **Post date:** [February 27, 2023, 10:01am UTC](https://governance.aave.com/t/arfc-freeze-busd-on-aave-v2/11842/9 "2023-02-27T10:01:06Z")
AIP-162 has been [executed](https://app.aave.com/governance/proposal/162/). The ACI will publish a offboarding plan & roadmap for this asset shortly