The Aave community has been actively discussing the upcoming transition of Ethereum to Proof-of-Stake (PoS), known as The Merge. Bgdlabs provided a comprehensive technical analysis, explaining that the transition should only slightly affect Aave's systems, with no immediate action needed. The Merge consists of two Ethereum upgrades: Bellatrix, affecting the Beacon Chain, and Paris, affecting the current execution layer processing Ethereum transactions. The latter is more significant for Aave.

Bgdlabs clarified that Aave's smart contracts are not dependent on the block header's structures, blockhash, or difficulty, which are areas that could be affected by the upgrade. However, Aave's governance could be slightly impacted due to shorter block slots, which may reduce voting and queuing times. They also noted that while new concepts of safe head and finalized blocks could disrupt Aave's off-chain infrastructure, it's expected that Web3 libraries will maintain backward compatibility.

The Aave protocol interacts with other systems like Chainlink, wallet providers, and liquidity venues like DEXes and Parawap, which are all preparing for The Merge. Centralized stablecoin issuers, including USDC, USDT, TUSD, BUSD, PAX, GUSD, and USDP, are expected to support the transition. Other assets listed on Aave v2 Ethereum, such as DAI and WBTC, don't have a reason to exist on non-PoS Ethereum post-upgrade. In the event of a fork of the Ethereum chain, Bgdlabs believes that a PoS Ethereum fork would be considered canonical.

The Merge is scheduled for its final phase next week, with the Bellatrix and Paris upgrades happening on the Goerli test network. After this, The Merge will happen on Ethereum mainnet. Aave's governance voting and queueing duration will be slightly lower than 3 and 1 days, respectively, and the Aave UI may need some small adaptations. The community appreciates Bgdlabs' post for its clarity on the implications of PoS for Ethereum and Aave.