Aave has held a poll where its community members have to vote on a proposal to stop Ethereum lending on the platform until after the update of Marj. Ave believes that the DeFi platform may face risks due to the controversial Ethereum Proof-of-Work (ETHPoW) hardfork in the Ethereum Merge process.
According to Mihan Blockchain and quoted by Coingap, the lending and borrowing protocol of Ave Proposal has introduced the “temporary suspension of Ethereum lending” until the end of the Marj update. Voting for this proposal started today on August 30 (September 8) and will end on September 2 (September 11).
During the Ethereum Marge, each user is given the equivalent of ETH in their wallet, from the coins of forked chains, including ETHW. This creates an incentive for users to make a profit by borrowing Ether before the collapse. This causes Ether liquidity pools in lending platforms such as Ave to be empty and causes these platforms to suffer. As a result, stopping Ethereum lending in this protocol can reduce the aforementioned risks.
Users can benefit from the ETHW (Ethereum Proof-of-Work) token by borrowing Ether before the release of Marj. Therefore, this issue can cause the dangers of using too much ether before marj.
In addition, the increase in Ethereum borrowing can happen through reverse borrowing. Investors stake their DiFi Ether and receive stETH tokens. They then deposit the stETH token as collateral in lending protocols such as Ave, so that they can borrow more ether and receive more stETH tokens, and the cycle continues in this way. Currently, approximately $907 million in stETH tokens have been deposited into Ave as collateral for Ether loans.
This can cause users to exit their trading positions, thus losing the value of stETH and Ether one-to-one. Therefore, the risk of liquidation of trading positions in the crypto market increases.
In this vote, the option of paying 60 AAVE tokens from the AAVE treasury to MakerDAO in each lending process is proposed. This prevents the presence of intermediaries in this proposal.
Voting Snapshot makes 4 options available to the Ave community. These options include temporarily stopping Ether borrowing and paying 60 AAVE tokens, temporarily stopping Ether borrowing and deciding on payment in a separate proposal, not stopping Ether borrowing and not participating in the vote.