As a Post Mortem of AIP-97’s performance, Gauntlet has analyzed market risk and borrower behavior before, during, and after the Merge. Here are several insights we would like to share with the broader community:
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ETH utilization dropped to 45% within the same day post the Merge. Since the Merge, utilization has normalized to pre-September levels.
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Aave’s ETH borrow rate has normalized post the Merge and returned to pre-September levels.
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No significant new insolvencies post Merge. The chart below shows all new insolvencies, an estimate based on supply and borrow amounts.
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Pricing feed from Chainlink did not indicate any price feed disruptions during the Merge event.
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We are monitoring ETH pool utilization and withdrawals to understand supplier elasticity. After the Merge, Aave experienced an increase in supplied ETH.
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We are monitoring stETH/ETH recursive positions, which is abstracted away by icETH token. ETH borrowing costs impacted the yield on this recursive ETH index prior to the merge but returned positive afterward.
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Curve’s ETH/stETH liquidity pool had a highly disproportionate amount of stETH to ETH prior to the Merge, as shown in this dashboard. Since the Merge, the liquidity pool has experienced a high inflow of ETH. This rebalance of ETH/stETH within the pool reduces the price deviation risk between ETH and stETH.
