Aave may shift exclusively to the Proof-of-Stake (PoS) version of Ethereum, Ethereum 2.0, that will be rolled out after the completion of The Merge.
The Merge is one of the longest awaited events in the crypto community. While those opposing keep reiterating their proposal for Ethereum to undergo a hard fork after it transforms into a PoS version on September 15, many protocols like Aave are considering whether to shift exclusively to the PoS version.
According to a proposal announced on Tuesday, members of the DAO governing the open source liquidity protocol considered whether it was “effectively impossible to sustain a viable Aave market” if it were to function on any Ethereum fork running on the consensus mechanism of Proof-of-Work, given that it was a general consensus from builders involved in the protocol’s development.
For the continued existence of the protocol for the community, the Aave DAO strongly believes that it should commit to the Ethereum Mainnet running under the PoS consensus mechanism.
The DAO’s formal position will be determined via the governance vote. If the proposal is passed, the community will have the guardian power to shut down Aave Deployments on any Ethereum hard fork after the Merge.
The Aave protocol said that it saw the urgency to send a clear signal to the DeFi ecosystem about where it stands with respect to the Ethereum Merge.
As the PoS and PoW debate continues to intensify, Circle, Chainlink have recently announced support for Ethereum’s shift to a PoS chain.
The Aave protocol is the third-largest DEFi application in the world as measured by Total Value Locked (TVL) and runs a decentralized non-custodial lending protocol where users can participate by borrowing or depositing assets.
Ethereum is currently the second-largest token in the crypto cart, with a market cap of 225.8B and circulating supply of 122M at the time of writing. The Merge is expected to occur sometime on 15 September, 2022.