Prior to The Merge’s major update, the proposal to suspend borrowing in Ethereum via the Aave DeFi protocol garnered support for almost 78% of the vote.

The authors motivated the pause in lending due to the risk of high growth in volumes. Users are expected to borrow Ethereum to take advantage of potential PoW forks of the second largest cryptocurrency network.

“High usage hinders liquidation, increasing the chances of the protocol going bankrupt. Additionally, an increased ETH borrowing rate can make recursive stETH/ETH positions unprofitable. This will increase the chances of users closing positions and increasing the price divergence of stETH.”

According to Dune Analytics, there has been no noticeable increase in loan volume on the protocol in the past month.

According to DeFi Llama, the value of funds locked in Aave has dropped nearly 10% over the past 30 days to $6.45 billion.

At the time of writing, stETH is trading on Ethereum (CoinGecko) at a discount of about 3.5%. Liquid staking platform Lido Finance tokens represent ETH locked in the Beacon Chain PoS network. The price of the derivative asset was different from its “original” value in June. This happened against the background of the fact that the largest pool of ETH/stETH liquidity in the Curve protocol was reduced by nearly seven times to $620 million.

Recall that the Ethereum developers planned the mainnet transition to the PoS algorithm around September 15.

Read ForkLog bitcoin news in our Telegram – cryptocurrency news, courses and analysis.