ARC: Aave DAO Stance on Ethereum POW Fork

Simple Summary

This ARC calls for the Aave DAO to commit to selecting the Ethereum Mainnet running under the Proof of Stake consensus over any Ethereum fork running an alternative consensus (such as Proof of Work).

Motivation

Ethereum is undergoing a long-awaited core change, switching its consensus mechanism from Proof of Work to Proof of Stake. More information about this change and its impact can be found through this succinct summary by BGD Labs as well as here & here.

The Aave Protocol code will be fully functional following the Ethereum consensus change as has been demonstrated through testing. This includes the deployment of Aave V3 on the Ropsten and Goerli testnets for public testing during their merges.

There is general consensus from builders involved in the protocol’s development that it is effectively impossible to sustain a viable Aave Market on any Ethereum fork running an alternative consensus (such as Proof of Work). To ensure continued existence of the protocol for the community, the Aave DAO should consider signaling strongly that the Aave Protocol should commit to the Ethereum Mainnet, running under Proof of Stake consensus.

The Aave protocol is one of the largest DeFi applications in the world as measured by TVL and is an essential piece of infrastructure powering hundreds of other dApps and experiences in the DeFi ecosystem. The DAO should send a clear signal to the DeFi ecosystem about where it stands with respect to the Ethereum merge.

The DAO’s formal position will be determined via this governance vote.

Specification

  • Formally signal the Aave DAO Deployment on the Ethereum Mainnet running under the Proof of Stake consensus is “the canonical” governance of the Aave DAO & Markets.
  • Authorize the Community Guardian to take the necessary actions to shut down Aave Deployments on any forks arising from the Ethereum Paris Hard Fork (the Merge).
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From our perspective, it is not even an option to NOT consider Ethereum PoS as canonical Ethereum, so we suggest not executing any on-chain action concerning any type of PoW fork.

Regarding the liquidity protocol, as we explained in our analysis BGD. Technical analysis Aave <> Ethereum's PoS Merge, there is no infrastructure assurance on any potential fork, so current users of Aave Ethereum should not transact in a non-PoS Ethereum.

In what affects the Aave governance, everything around it (AAVE token, all the different UIs accessing it) will be working on Ethereum PoS, so in practice, there should be no activity on any fork. E.g. the AAVE token will live on Ethereum PoS.

It is important to highlight that the Community Guardian of the Aave Governance on Ethereum only has to cancel permissions, so there is no mechanism to do what is described, only with important technical overhead/development, which in our opinion is definitely not worth it.

In summary, from a technical/practical perspective, there is no substance on any potential non-PoS fork of Ethereum post-merge, so it should be implicit that Aave “accepts” PoS Ethereum, because it is the only Ethereum.

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