Why are DeFi speculators borrowing ETH before the merge?

in LeoFinance3 months ago

Hi HODLers and Degens,

It might seem weird to borrow ETH just before the merge but after reading this, you might think: "Maybe I should do it too!".

image.png
Image Source

Bounty hunters are spending countless hours for any bugs in the code.
Consensys is launching NFTs for the occasion and CEX are on the look-out for poentential Ethereum forks!

DeFi Degens are also refreshing their twitter feed for an unexpected new ETH Forks.

For those that were in Crypto back in 2017, you probably all remember the Bitcoin Cash (BCH), Bitcoin Gold (BTG) and Bitcoin Diamond (BCD) forks. This was "free" money airdropped to Bitcoin holders!

Degens are therefore borrowing ETH if any new forks appears!

Borrowing rates for ETH on Aave have skyrocketed!

image.png

This is not so bad but such high utilization rate might cause issues:

  1. When 100% of all funds in a pool are in use, depositors won’t be able to withdraw their ETH out
  2. High utilization rate may cause liquidation problems for lending platforms and we all know this ain't good and will clog up the network

Finally, there is also the risk that utilization gets so high that the APR becomes >1,000% and therefore you better pray that your airdrop comes fast and makes up for the ETH fees you will have to pay.

In any case, I think this is probably a kind of safe Degen bet as long as you do not sell any of the ETH you borrowed!

Anyone trying this or planning to?

In the meantime, stay safe out there!

Source

Latest articles

Posted Using LeoFinance Beta

Sort:  

I didn't borrow anything, but I hold a lot of ETH and I'm hoping for forks. In addition I bought some ETC, which I have done quite well on so far, due to demand from miners.

Posted Using LeoFinance Beta

Damn! You've got your gamplean set up!

Ready to become a Big Blue Whale ;)

Posted Using LeoFinance Beta

😂 now I need some ETH just incase.

You ALWAYS need some ETH, BTC and HIVE :D

Posted Using LeoFinance Beta

This post has been manually curated by @bhattg from Indiaunited community. Join us on our Discord Server.

Do you know that you can earn a passive income by delegating your Leo power to @india-leo account? We share 100 % of the curation rewards with the delegators.

Please contribute to the community by upvoting this comment and posts made by @indiaunited.

Thank you! I always appreciate these!

Posted Using LeoFinance Beta

This week ETH price good

Surely looks like it. Let's see if it holds :D

Posted Using LeoFinance Beta