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