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Aave DAO Considers Leaving Polygon
Aave DAO is contemplating leaving Polygon, a scaling layer for Ethereum-based projects, following a proposal by Polygon to utilize stablecoin reserves for yield farming on other DeFi platforms. The decision is said to be in its early stages, and Aave DAO may cease operations on the Ethereum layer 2 platform if the scaling layer upholds the proposal.
According to Marc Zeller, the founder of Aave Chain, Polygon’s proposal will significantly impact the risk profiles of bridged assets within the scaling layer. Zeller expressed concerns that the risks could spill over to Aave V2 and V3 on Polygon, something that Aave DAO is not willing to take chances with considering it has been affected by bridge vulnerabilities in the past.
To mitigate this risk, Zeller suggested adjusting the “risk parameters” for Polygon-powered Aave instances to incentivize migration from the scaling layer. The suggestions include reducing the loan-to-value (LTV) ratio for all assets on Polygon-based Aave implementation to 0%. This move would effectively deactivate the option to use bridged assets on Aave, subsequently sending users to other Aave instances with alternative options.
Zeller’s proposals are still in their infancy stage and await feedback from all stakeholders before progressing to the snapshot and AIP stages. The development comes a week after Sports Illustrated migrated its NFT ticketing platform from Polygon to Avalanche, a layer one blockchain.
Source: fullycrypto.com
