Introduction

with Merge approaching and the spark of speculation in Ethereum community whether if it’s going to be successful or not and also miners trying to maintain the old chain through a fork, users acquired different strategies to make the best bet on this transition and have the lowest exposure to risks.

one of these strategies was to supply stable coins to Lending platforms and borrow ethereum against their collateral.

In This Dashboard…

we’re going to investigate how users of lending platform reacted to this change and leveraged this strategy and answer the following questions:

1. is there a change in collaterals and type of collaterals supplied in lending platforms before and after the merge?
2. how marge impacted the borrowing of Ethereum before and after the event.

and later on we will conclude the dashboard with insights on Protocols tackled the possible risks.

Insights

looking at deposits charts for both platforms we can see that massive amount of stables, predominantly USDC supplied into market days before the merge, in Sep 13th AAVE had the most supplied assets in the last 60 days and a day after, compound followed, as we can see USDC accounts for the most of stable deposit with over 70% for AAVE and 55% for Compound in the last 2 months.

on the other hand we notice that during the period of Sep 8th to 18th there isn’t any borrows on AAVE, it’s because AAVE foundation and Governance decided to Stop Loaning Ether after nearly All The ETH On AAVE Has Been Borrowed Ahead Of The Merge. this caused a massive surge in borrow rates on both protocols with nearly 75% APR on AAVE and 9% APY (APR vs. APR) on Compound.

Compound in other hand chose a different structure to tackle the problem of ETH-PoW farmers sucking their liquidity by capping their ETH borrows at 100K ETH which translates to a 50% utilization rate based on their 200K reserves and increased interest rates for large borrowers with Proposal 119.

we also see that from Aug 30th to Sep 7 borrowing ETH on Compound halted, this was due an error in Compound III code which is fixed by Proposal 119.

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Verdicts

• Heavy Amount of Stables supplied into Lending platforms before merge to used as collateral against borrowing ETH.
• the reason behind this was that after the merge chain will be split into PoS and PoW Fork and people want to maximize the ETH-PoW.
• USDC was the biggest stable supplied into these platforms to borrow ETH.
• massive amount of ETH borrowed before the merge took place which cause a surge in borrow rates of both protocols.
• borrowers repaid their loan right after successful merge which lowered the surge in borrow and utilization rates.
• for every ETH before merged uses got ETH-POW in a 1:1 rate which is trading around 6$ at time of writing this dashboard.

Methodology And Related Sources

• for this analysis i used Flipside Crypto’s AAVE and Compound Tables.
• 100% of ETH on AAVE getting borrowed.
• [AAVE Stops Loaning ETH](https://Aave Stops Loaning Ether).
• Speculators Are Borrowing Ethereum Before Merge.
• Compound Code Bug
• Compound Proposal 119
• Compound Proposal 112