Reason Aave Community Proposes To Pause ETH Borrowing Leading Up To The Merge!

Aave community proposes to pause ETH borrowing leading up to ‘The Merge’. On August 30th, the Aave community proposed halting ETH borrowing for a while as ‘The Merge’ is approaching.

The Proposal

On August 30th, the Aave community shared a proposal on what they should do for ‘The Merge’. The proposal specified that the temporary pause of ETH borrowing is in the period leading up to ‘The Merge’. To clarify, ‘The Merge’ is a change in Ethereum from Proof-of-Work (PoW) to Proof-of-Stake (PoS).

According to the proposal, before ‘The Merge’, the Aave protocol faces the risk of high utilization in the ETH market. The temporary pause in ETH borrowing will reduce the risk of high utilization.

The proposal stated, “The risk of high utilization in the ETH market is driven by users potentially benefiting from the forked PoW ETH (ETHW) by borrowing ETH before the merge.”

The proposal is currently still open for voting for AAVE token holders. The voting started on August 30th to September 2nd to determine whether Aave should temporarily pause ETH borrowing. They can choose to agree with the proposal, disagree, or abstain.

In addition, a few weeks ago, there was voting about the Aave DAO stance on the Ethereum POW fork.

Other Crypto Firms

Similar to Aave, other crypto firms have been actively informing the community on their position on the upcoming event, ‘The Merge’. Binance and Coinbase also announced the plan to briefly halt ETH and ERC-20 token deposits and withdrawals during ‘The Merge’. In addition, some crypto firms addressed the scenario of ETHW in their announcements.

Now, the community is waiting for more updates from Aave and other crypto firms.

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