The “Buy, Borrow, Die” Strategy Introduces Hidden Credit Risks to DeFi Pools

Investors are increasingly utilizing DeFi lending protocols to avoid capital gains taxes on digital assets. By depositing assets like ETH as collateral to borrow funds instead of selling, users defer tax liabilities. This practice, known as the “buy, borrow, die” strategy, is raising concerns as it potentially exposes DeFi liquidity pools to significant hidden credit risks.