DeFi
Aave group has voted in majority to approve the proposal to briefly halt Ethereum borrowing till the Merge with instant impact. The voting signifies the group agrees to pause Ethereum (ETH) borrowing to mitigate excessive ETH borrowing dangers on Aave amid the Merge and Ethereum laborious fork.
Aave Neighborhood Approves to Pause ETH Borrowing
The Aave group voted on the governance proposal “Quickly Pause ETH Borrowing” between August 30-September 2. The choice to briefly pause ETH borrowing and pay 60 AAVE tokens has obtained most votes, with 96.18% agreeing with the proposal.
In the meantime, choices to briefly pause ETH borrowing and determine token fee in a separate proposal, don’t pause ETH borrowing, and abstain from voting have obtained 3.07%, 0.13%, and 0.62% votes, respectively.
The group agrees to pause ETH borrowing and pay 60 AAVE from the Aave treasury to the MakerDAO, stopping proxy in relation to the proposal. In reality, voters have used nearly 214k AAVE to approve the proposal.
Aave believes customers can misuse the forked Ethereum PoW token (ETHW) by borrowing ETH earlier than the Merge. This dangers the excessive utilization of Ethereum (ETH) on Aave forward of the Merge. Additionally, it might trigger liquidations and annual proportion yields to develop into unfavorable. Due to this fact, it will increase the insolvency danger for Aave.
Furthermore, excessive ETH borrowing can influence the stETH/ETH recursive borrowing positions on Aave. This will likely result in customers liquidating their place, which is able to influence the stETH/ETH peg. Thus, it might danger additional liquidation and insolvency within the crypto market.
With the bulk approving the proposal to pause ETH borrowing on Aave, the group has mitigated all dangers. Furthermore, Aave DAO has already handed a proposal to assist the Ethereum Merge. Nonetheless, the lending platform has turned down assist for any Ethereum laborious fork.
Ethereum Merge Set to Occur Earlier than the Anticipated Date
The chance of the Ethereum Merge taking place earlier than the anticipated date of September 15 is greater as the common hash price has jumped above 900 TH/s.
Vitalik Buterin claimed the precise date of Ethereum Merge depends upon the hash price. The community wants a median hash price of 872 TH/s to set off the Merge on September 15. A better hash price will possible push the Merge to occur earlier.