Thanks for your feedback, that’s very much needed.
Regarding this:
I think the best way to move forward would be to not enforce the forced swap to variable rates in times of high demand. This is going to absolutely wreck some users that don’t pay close attention to what is happening on the protocol and leave a bad impression on those users. I would propose leaving the stable rates in place for a year from V2 launch which gives everyone that never had an option to use V2 the chance to reach long term tax status on their collateral making migration tolerable.
Please keep in mind that the rebalancing mechanism is already in place, with the difference that you get rebalanced to the highest possible stable rate (which currently would be 66%) and you can rebalance down as soon as the demand lowers. Although LPs haven’t been using this feature much yet, you can be pretty sure they will start to, and the net effect will be the same. Note that this mechanism was implemented from day one of the Aave protocol, and on purpose - to avoid having LPs being overexposed to long term, low income stable rate loans. So whether or not this proposal passes, if you have a long term, low stable rate position i recommend you keep an eye on it to avoid being rebalanced without knowing it. I know everyone enjoys low borrow rates but when market demand is high, you can’t expect those rates to last forever.
So now users are being forced to either liquidate positions they’ve created from borrowings since depositing (realizing short term gains taxable as income) to pay back their debt, migrate which is likely a taxable event for anyone that got involved in defi summer, or suffer a much higher Interest rate than expected until their holdings reach long term tax treatment.
The proposed solution did not properly address the tax treatment concerns raised earlier this year. I understand that everyone is excited to concentrate the liquidity into 1 version, but reducing reasonable optionality doesn’t help the protocol’s users.
The tokenization and its potential consequences is of course an important topic and the community is very much putting effort on finding a proper solution, but it’s not something that can be solved short term and unfortunately not for users that already deposited and obtained aTokens in exchange.
There are some ideas in place but my guess it will take some time to find a solution that works for everybody. In the meantime though, the experience needs to be great for both the sides of the userbase - lenders and borrowers.