Degens Lend ETH to Get Forked Tokens, Cause Issues For DeFi Platforms
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Given that many Ether miners are anticipated to continue mining on a forked PoW chain, or potentially even numerous chains, after the much-awaited Merge, the topic has gained steam over the past month or two. The comparable quantities of the new tokens would be airdropped to on-chain ETH holders who are using non-custodial wallets or holding on to exchanges that allow ETHPoW in the event of a fork.
Votes Of Aave Governing Community
The Aave governing community voted decisively in support of stopping ETH lending "in the interim time leading up to the Merge" on September 6. This suggestion first came up on August 24 due to the surge in demand for Aave ETH loans reaching levels that were beginning to exert pressure on the liquidity supply.
The proposal states that if these holdings begin to lose money, users would probably hurry to unwind their holdings until the ETH borrow rate reverts to a steady level where the APY (Annual Percentage Yield) becomes acceptable. As a result, the liquidity supply of ETH on Aave would be put under substantial strain.
The plan was implemented on the same day as the vote and yielded 77.87% in favor (528,290 voters) and 22.13% against (150,170 voters).
Concept of Compound
Another DeFi lender, Compound Finance, made a request earlier this week relating to forking Ethereum, and it went ahead with 0 votes against it and 347,559 in favor. The Concept of Compound, which became active on September 5, was to limit the borrowing cap at 100,000 ETH until things had calmed down following the Merge.
The protocol also changed its interest model to a "jump rate model with substantially higher rates after achieving 80% borrow utilization"; if 100% utilization occurs, the rate jumps to a maximum of 1000% APR.