In my opinion, this plan is far too accelerated and would hurt Aave and its users if executed in this form in the near future. It is not a matter of only the technical readiness, but also economic and tax concerns that can deter suppliers, reducing the liquidity for everyone.
The value of ETH and many tokens have risen greatly in the past few months. Nearly all of the deposits on Aave have occurred in the past 12 months. In the US, the safe tax view is that deposits to Aave are taxable events (as token to aToken trades). I believe that it is also reasonable to consider v1 to v2 migration as a taxable event unless we hear otherwise because the two systems are completely separate and access different markets… it’s not just an upgrade of code or a swap analogous to a stock split like LEND to AAVE.
This means that if a US person or entity (and probably other jurisdictions as well) migrates from Aave v1 to Aave v2, they will immediately incur the higher short-term capital gains tax on the difference in value from when they deposited the collateral to the time when the migration takes place. This means basically immediately paying income tax on that difference, which is likely a large percentage of the collateral value.
One important use case for suppliers is the ability to postpone taxes by depositing collateral and borrowing against it, then slowly selling the collateral on their own schedule. By proceeding to phase 4 within a matter of weeks, making it impossible for them to deposit more collateral to maintain a healthy safety ratio, we are effectively forcing them to migrate immediately and incur a huge tax bill. In the announcements, it’s made to sound like you can take as long as you want to migrate, no rush. But this is simply not true if you have a large borrow. You can’t continue on the way you were before with the same level of risk and you may be forced to migrate or be liquidated. Either way you’re at risk of incurring a big surprise tax bill at any time.
I think a foundational part of DeFi like Aave should provide stability and predictability. Giving people notice that they’re effectively forced to migrate their positions and incur a huge tax bill within a matter of weeks is not that.
I think that everyone on Aave would be hurt if suppliers in the future are turned off from depositing into Aave because we establish a track record of rapidly deprecating its services on a timeframe too short for a financial platform. It makes me wonder if Aave v3 is going to come in a year, requiring another taxable event aToken migration.
I hope you all can consider this point of view and please let me know if you have any questions.