Aave is about to leave Polygon blockchain after $1 billion proposal sparks conflict – DL News
- Two key Aave delegates are preparing to vote on leaving the popular blockchain.
- The Polygon Labs CEO said Aave engaged in “anti-competitive behavior.”
- Critics have criticized the recent proposal to monetize dormant stablecoins on Polygon Bridge.
Aave, the largest lending protocol in decentralized finance, is set to leave the Polygon blockchain after leaders at both organizations exchanged barbs over a proposal to invest $1 billion in dormant cryptocurrencies on the Polygon-Ethereum bridge.
Two key delegates at the Aave DAO, the digital cooperative that runs the Aave protocol, said DL News They will vote to leave Polygon when the question is put before Aave DAO members.
One of those delegates, longtime Aave contributor Mark Zeller, was the first to suggest a split. He added that a preliminary vote is expected to be held online next month.
The other, who uses the alias EzR3aL, said he too would support the measure.
Dramatic blow
Together, they have enough votes to determine the outcome of any proposal that comes before the Aave DAO, if recent voting patterns continue into the new year.
Other key Aave delegates have not returned DL News Request comment or decline comment.
Aave represents about 40% of the cryptocurrencies locked in Polygon’s myriad DeFi protocols, and its departure would be a huge blow to the popular blockchain.
The specter of Avi’s departure led to accusations that its leaders used monopolistic tactics to undermine a rival.
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Marc Boiron, CEO of Polygon Labs, said the investment proposal was at an initial stage and several months away from becoming a reality. DL News. Furthermore, despite Aave’s huge stake in the Polygon ecosystem, Polygon accounts for only 1.5% of Aave’s revenue.
“We have the power to harm them” – that’s what this statement says. “We have all the power here, like the big dog,” Boiron said.
“This to me is pure anti-competitive behaviour, when you combine those two things.”
Aave leadership, in turn, said it was simply taking a hard line against the deeply unpopular, high-risk proposal and its architects.
ribbed?
Moving cryptocurrencies from one blockchain to another usually requires software known as a bridge, which holds cryptocurrencies from the original chain and produces new tokens on the destination chain.
New tokens are always redeemable to those sitting on the bridge and, therefore, are traded at par on the destination chain.
There is approximately $4 billion worth of cryptocurrencies in Polygon’s built-in bridge, according to L2BEAT.
Two weeks ago, risk management firm Allez Labs, along with DeFi projects Morpho and Yearn, Suggested Transferring about $1.3 billion of those cryptocurrencies — all stablecoins pegged to the dollar — into Morpho, where they can be borrowed with interest.
Instead of sitting idle on Polygon Bridge, stablecoins should generate an estimated $70 million revenue stream annually, according to Allez Labs and its partners.
Polygon, in turn, can use the money to attract new developers to its ecosystem.
It was controversial from the beginning.
But the proposal went viral after the Aave Chan initiative launched by Zeller, a service provider that contributes to the development and management of Aave, Suggested Polygon withdraws lending protocol to ‘mitigate risk’.
Zeller briefly shared his counterproposal on X comment: “Polygon operation (e).”
Alize’s suggestion and Zeller’s reaction caused a stir on social media. Some saw Zeller’s response attempt to Discredit Morpho, a fast-growing competitor is He has Relentlessly criticize During the past year.
But others saw A reasonable answer To a risky proposition.
Bridges are already among Most at risk Pieces of software in encryption. Critics said that placing risks above that – with profits going to Polygon, rather than depositors – was unacceptable.
Executives at stablecoin issuers pregnancy and circle They expressed their opposition to this proposal.
Andre Cronje, the DeFi developer behind several protocols, Looks like To fractional reserve banking. He described this as “the antithesis of why the original DeFi system was created.”
“Fucking show”
Last week, Polygon’s leadership said the proposal was almost dead, celebrating the incident as a victory for the emerging blockchain management system, which gives investors a say in its development.
“It was a ridiculous show and I absolutely loved every second of it!” Polygon co-founder Mihailo Bilić books On X.
“The community found this proposal unacceptable and expressed this opinion loudly, attracting a lot of attention across the ecosystem and beyond. This is by design.”
But a counterproposal from the Aave Chan Initiative sparked a fierce protest from Polygon Labs executives, who accused Aave’s leadership of abusing its power to weaken its rival, Morpho.
“This is a prime example of DAO leadership engaging in anti-competitive tactics and bullying other ecosystems to play to their tune,” said Sandeep Nailwal, co-founder of Polygon. books.
Aave’s leadership has rejected the accusation.
“Framing the Aave DAO proposal as anti-competitive behavior is inaccurate and distracts from the real issue: user security,” said Stani Kuleshov, founder and CEO of Aave. books On December 18th.
“Inheriting third-party protocol risks without DAO approval is not something the Aave DAO is interested in and ACI has taken the steps required to determine what’s next for Polygon’s market.”
“The world in which Aave leaves is not the world I want.”
— Marc Boiron, Polygon
Not all Aave members DAO He thinks Polygon’s departure was necessary, and Boiron did just that Named Its members should reject Zeller’s counterproposal.
But Zeller’s Aave Chan Initiative has cast more than 377,000 votes on recent Aave DAO proposals. EzR3aL threw another 155,000.
Together they account for more than half of the votes cast in most cases Recent proposalswith totals rarely exceeding 870,000.
hue and cry
Ezz Riel said DL News They opposed the Allez Labs proposal and assumed it would be withdrawn or modified to quell public outcry.
“They did not do anything, but instead tried to attack several individuals within the area [Aave] They said.
“That reaction proved to me that it was never about [proposal] They continued: “And its security.”
As for Boiron, he expressed his regret that things had reached this point.
“The world in which Avi leaves is not the world I want,” Boiron said.
“I think the Aave community is honestly great. Very different from Aave leadership. But will it be detrimental? I think it will ultimately depend on what the teams decide to bridge the gap.”
Alex Gilbert is DL NewsNew York-based DeFi reporter. You can contact him at aleks@dlnews.com.
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