Aave Community Gives Support to Ethereum Borrowing Suspension Prior to The Merge

A proposal to suspend borrowing in Ethereum through the DeFi protocol Aave before the massive update of The Merge has received almost 78% positive votes.

The authors of the initiative motivated the pause in lending by the high risk of growth in volumes. Users are expected to borrow Ethereum to capitalize on potential PoW forks of the second-largest cryptocurrency network.

According to the explanation:

“High utilization hinders liquidation operations, increasing the chances of the protocol becoming insolvent. Additionally, an increased ETH borrowing rate could make recursive stETH/ETH positions unprofitable. This will increase the chances that users will close positions and increase the price deviation of stETH.”

According to Dune Analytics, there has been no noticeable increase in the volume of lending in the protocol over the past month.