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ETH Aave founder and CEO Stani Kulechov has publicly opposed an EIP proposal within the Ethereum community that aims to limit pledged proceeds. Kulechov believes that the regulation will not achieve the expected results and may instead damage the Ethereum ecosystem and ETH's attractiveness as an investment asset.
The proposal envisages reducing the pledge yield to 0%, if the proportion of ETH pledged exceeds 50% of the total supply. Kulechov pointed out that this structure could cause pledge income to become unpredictable, preventing many participants from deriving financial benefits from it.
Kulechov, CEO of Aave, said that institutional investors particularly value predictable cash flow when establishing ETH positions. He pointed out that if earnings become uncertain, these investors may turn to other blockchain networks that provide more stable income, which will impose huge adoption costs on Ethereum.
Kulechov also believes that reducing the pledge yield to zero will basically invalidate the borrowing and income strategy through ETH. In this case, he said that the main use of ETH borrowing may be limited to short selling.
Kulechov said investors using ETH-related income products may turn to stablecoins or other interest-bearing assets, suggesting that the proposal could significantly reduce the Ethereum-based lending and income markets.
Kulechov pointed out in his personal assessment that the proposal would weaken ETH's viability as an asset and limit its long-term potential. The Aave CEO expressed hope that the proposal would not move forward, otherwise many market participants could turn their interest to other blockchain networks.
Kulechov believes that Ethereum should not be punished for its growth, noting that any changes to the Internet economy's incentive structure should be carefully considered for its impact on DeFi, pledges and institutional adoption.
* This is not investment advice.
