Investors are rapidly borrowing ETH to get free ETHW

Popular loan platforms from the DeFi sector are implementing limits due to the demand for Ether.

A significant number of speculators and investors have recently turned to cryptocurrency lenders. The goal of this group is a virtual currency belonging to the Ethereum project. It has recently been reported that these people have started a massive process of borrowing ETH on decentralized financial platforms such as Compound Finance or Aave to catch a drop of free Ethereum PoW (ETHW) tokens that will soon be created in connection with the network's hard fork.

Investors borrow ETH to get as much ETHW as possible

While the groundwork for the upcoming The Merge has already been laid, cryptocurrency speculators are preparing not only for this event. From observing the behavior of the lenders from the DeFi sector, it is clear that they had to withhold or limit loans in the ETH cryptocurrency due to the huge demand that they are unable to handle.

This whole situation hit the loan giants of the decentralized finance industry the most, i.e. AAVE and Compound Finance. This problem started to build up over the past month and is still happening.

At the very beginning of August, Ethereum miners opposed the transition of this project from Proof of Work (PoW) to Proof of Stake (PoS), as it would mean the end of ETH mining for them. Therefore, they proposed to create a new additional alternative in the form of the Ethereum PoW (ETHW) token. It would be created as a result of a hard fork of the Ethereum network.

In the event of a network fork, all ETH wallets will receive ETHW tokens for free in an amount directly proportional to the balance of ETH accumulated. Hence, there is a rapidly growing demand for Ether among people who want to take advantage of this opportunity and get new financial profits for free.

On Tuesday, the decentralized financial protocol community Aave decided by majority to suspend loans from ETH during the transition period that will precede The Merge. This proposal initially appeared at the stage of August 24 this year, when the platform experienced a sharp increase in demand for ETH to levels that began to put pressure on the liquidity supply of this cryptocurrency.

Another well-known lender and giant of the DeFi sector - Compound Finance also felt the increased demand for ETH from its users. Taking this into account, this financial protocol introduced quite recently a loan limit of 100,000 ETH coins until the emotions related to the latest Ethereum update subsided.

Users are rapidly withdrawing ETH from exchanges to external wallets

Recently, there has also been the third largest number of withdrawals of ETH coins from trading platforms since March 2022. Cryptocurrency market experts attribute this phenomenon to an important update of Ethereum that will take place in mid-September, which will lead to the possibility of the creation of a fork of this network.

While it is still unclear from today's perspective whether ETHW will attract a sufficiently large number of investors and miners, speculators are unlikely to miss this opportunity. Based on the data contained in the latest report published by Delphi Digital, it can be concluded that the increase in ETH outflow from exchanges is directly related to the growing desire for free ETHW tokens.

Currently, Ether is moving around 1.5 thousand dollars for one coin. In the last 24 hours, its value has changed by nearly 9%. In a weekly perspective, ETH decreased by slightly more than 3%.