Leading DeFi Lender Looks To Expand L2 Presence
Aave, the top decentralized lending protocol with nearly $8B in total value locked (TVL), is set to launch on Polygon’s new zkEVM Layer 2 network.
A preliminary poll pitching the deployment on Polygon ZkEVM passed on Wednesday with near-unanimous support. The proposal will now move to a formal on-chain vote.
Aave V3 was launched on the Polygon zkEVM testnet in October 2022, meaning the code has already undergone six months of testing. The protocol would initially maintain conservative risk parameters, proposing support for only USDC, ETH, and MATIC when deployed.
If passed, the deployment could offer significant benefits for both projects. Aave v3 could drive significant value onto Polygon’s fresh-faced zkEVM network, while potentially giving Aave a competitive edge over rival lending protocols seeking to deploy on the network.
Aave also plans to launch on ZkSync Era, further expanding its presence across Ethereum’s growing Layer 2 ecosystem. Aave already operates on Arbitrum and Optimism, the two largest L2s.
Aave v2 was among the first ‘blue-chip’ DeFi protocols to launch on Polygon’s PoS sidechain in April 2021, when Polygon initiated a $40M liquidity mining program.
Polygon’s TVL rocketed from $150M in mid-April to an all-time high of nearly $10B just two months later, according to DeFi Llama. Aave v2 remains the top protocol on Polygon PoS with $316M, nearly 30% of the network’s TVL. Polygon PoS is the fifth-largest smart contract network with $1.1B in user deposits.
Polygon launched its zkEVM in beta on March 27.
zkEVMs are zero-knowledge rollups boasting compatibility with the Ethereum Virtual Machine (EVM), Ethereum’s core smart contract engine. Rollups work by bundling together transactions on Layer 2 before submitting them to Ethereum’s mainnet for finalization, sharing the transaction fees incurred across each individual transaction.
Arbitrum and Optimism emerged as Ethereum’s top Layer 2 solutions last year. Both L2s are optimistic rollups, offering EVM compatibility at the expense of a seven-day delay on mainnet withdrawals to detect fraud.
By contrast, rollups secured by zero-knowledge proofs offer fast finalization and enhanced privacy. However, early zk-rollups suffered from incompatibility with the EVM, meaning developers could not easily port their code between the Ethereum mainnet and Layer 2.
Polygon joined a cohort of development teams working to deliver a zk-rollup offering EVM compatibility when it acquired Hermez in August 2021 for $250M.
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- Source: https://thedefiant.io/aave-polygon-zkevm-deployment/