The forked Ether proof-of-work tokens are now becoming a cause of headaches for DeFi protocols. In fact, more and more speculators are using Ether loans. They are doing this in order to increase the possibility of earning ETHPoW tokens. The much-anticipated merger is on its way. As a result, such issues are causing much trouble for the Ether market.
A large number of Ether miners are going to work on a forked PoW chain. In fact, such is the expectation as of now, till the Ether merger takes place. In such a scenario, the issue of earning ETHPoW tokens has been on a rise over the past few months. Therefore, if you wish to learn more about this issue, then this article is the perfect stop for you. Keep reading to know more about the latest concern in the Ether market.
The Real News
The fork works very interestingly. In fact, the on-chain ETH holders, using noncustodial wallets or ETHPoW-supported exchanges, will gain the most out of it. During a fork, equivalent amounts of the new tokens will be airdropped to the ETH holdings of those users. In such cases, the forked PoW chain will duplicate the ETH balance of the users on the existing chain.
The Aave governance community recently made an interesting decision. They decided to halt ETH lending before the merger. They arrived at this decision through a voting procedure. In fact, the proposal to halt ETH lending came up earlier on August 24. This increasing demand, in fact, started to put pressure on the supply of liquidity.
Aave follows a complex system for issuing interest rates. It determines the percentage using algorithms. In doing that the community also considers the demand for borrowing and liquidity on the platform. The proposal stated that stETH/ETH positions will start to become unprofitable, as soon as the ETH borrow rate reaches 5%. It further added that in that case, the users might rush to “unwind their positions”. This might continue as long as the ETH borrow rate does not come to a stable point.
The decision was recently passed with a majority vote of 77.87%. In fact, Compound Finance is yet another organisation that forked a proposal related to Ethereum risk mitigation.
Concluding Lines
The tendency of users to get free tokens is increasing. However, at the same time, many stablecoins are stepping away from the PoW chain. In such a situation the anticipation for the merger is becoming even more intense. Therefore, it remains to be seen, how the merger performs after it is successfully done.
Also read: Lyn Alden Talks About The Fed’s Policy To Curb Inflation
