This is a good question and I haven’t thought extensively about an ideal schedule for everyone. But my quick take on this…
I think that it would be reasonable for the disabling of borrowing over 2-3 months, so that anyone depending on borrowing from Aave in the short-term can continue for a while longer while planning the change over. Then delay the disabling of depositing to start in 8-12 months, so that anyone who wants to can maintain their collateral ratio at least until most people have switched over to long-term capital gains or had ample time to plan a change.
I would love to see what other people think as well, and I would like to better understand the tradeoffs of operating two systems in parallel. Is the main concern for having a speedy migration making sure as much liquidity is available as possible in a single new system so that it is more useful, for example for large flash loans? Are there other risks, like maintaining two systems takes a lot more effort, or may confuse users, etc?
Also I just want to give a quick example that might help illustrate why the migration is very difficult for some people tax-wise and what the timeframe looks like. Imagine someone spent their life savings of $100,000 to buy ETH on March 17, 2020 at $125, getting them 800 ETH. They immediately deposited into Aave. Fast forward to now and it’s worth over $900,000. They’ve been using Aave to borrow USDC to pay for their rent, so they can stay invested in ETH and not have to pay any taxes immediately.
Now if they have to execute the migration within the next few weeks while the gains are still short-term, the $800,000 difference between what they paid for the ETH and what it’s worth now would immediately become taxable at income tax rates in the US. Suddenly they have to pay almost $300,000 in taxes this year.
Before having to migrate, they didn’t have any immediate taxes to pay. They could’ve slowly sold off over several years. Now they suddenly have a $300,000 tax bill. They don’t have that much USD, so they either half to sell 37.5% of their ETH to pay it, or borrow $300,000. Both of these put them in a financially worse or riskier situation. They are surprised because they didn’t think that just months after depositing into Aave, the system would be deprecated.