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- Aave DAO is considering incentivizing migration from Polygon
- Aave DAO said it doesn’t agree with Polygon’s recent proposal to use stablecoin reserves for yield farming on other DeFi platforms
- Polygon has noted that the proposal is in its early stages and it’s currently listening to the community
Aave DAO may cease operations on the Ethereum layer 2 platform Polygon if the scaling layer upholds a proposal to use stablecoin reserves for yield farming. According to Aave chain founder Marc Zeller, Polygon’s proposal “will significantly impact the risk profiles of bridged assets within the” scaling layer. Zeller noted that the risks are likely to spill over to Aave V2 and V3 on Polygon, something that Aave isn’t ready to take chances with considering it has been affected by bridge vulnerabilities in the past.
Aave Wants to “Incentivize Migration”
Zeller has fronted suggestions to the Aave community seeking to adjust the “risk parameters” for Polygon-powered Aave instances in a way that will “incentivize migration” from the scaling layer. Among the suggestions is to reduce the loan-to-value (LTV) ratio for all assets on Polygon-based Aave implementation to 0%.
Adjusting the LTV ratio effectively deactivates the option to use bridged assets on Aave, consequently sending such users to other Aave instances with the provision. Other options include freezing “reserves on Aave V3 Polygon” and migrating “Aave Governance V3 voting infrastructure to another L2 network.”
Zeller’s suggestions are still in the infancy stage and are awaiting feedback from all stakeholders before graduating to the snapshot and AIP stages.
Aave Isn’t the First to Ditch Polygon
According to a Polygon Pre-PIP, the scaling layer seeks to deposit stablecoin reserves of the Polygon PoS Portal Bridge “into curated liquidity pools” Polygon has, however, said that it’s still collecting community feedback before presenting the proposal for voting.
Aave’s thoughts to ditch Polygon comes less than a week after Sports Illustrated migrated its NFT ticketing platform from Polygon to Avalanche, a layer one blockchain.
With Aave contemplating leaving Polygon, it’s to be seen whether other DeFi protocols will also disagree with the layer 2’s proposal to use assets deposited on its bridge for yield farming activities.
