Why DeFi Protocols Are Limiting ETH Borrowing Ahead of Ethereum’s Merge

Why DeFi Protocols Are Limiting ETH Borrowing Ahead of Ethereum’s Merge

The risks for both protocols, Compound and Aave, and perhaps other DeFi lenders, are similar: Airdrop speculators could suction up ETH deposits thereby creating liquidity constraints for other users. Indeed, other DeFi protocols are seeing users swap out ETH-derivatives, like Lido’s staked ETH (stETH), which won’t receive airdrops and is now trading at a significant discount, for ETH, which will.

Originally Posted on: https://www.coindesk.com/layer2/2022/09/08/why-defi-protocols-are-limiting-eth-borrowing-ahead-of-ethereums-merge/?utm_medium=referral&utm_source=rss&utm_campaign=headlines
By: Daniel Kuhn

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