As a seasoned crypto investor with years of experience navigating the tumultuous waters of DeFi, I find myself standing at the crossroads, contemplating the recent decision by Aave’s leadership to sever ties with Polygon. While I understand the concerns about bridge exploits, which have indeed caused significant financial losses in our industry, I cannot help but see a hint of monopolistic undertones in this move.
Stani Kulechov, CEO and founder of Avara, the parent entity for the suite of Aave companies, recently backed a proposal to drop support for Polygon markets from the Aave platform.
The suggestion to abandon Polygon originated after a preliminary enhancement proposition (PIP) from Allez Labs and Morpho, which proposed integrating stablecoins into Polygon’s proof-of-stake Portal bridge, with the aim of producing returns.
As stated by Kulechov, the proposed enhancement for Polygon was considered too risky regarding safety matters by Aave, since bridge exploits have historically caused some of the most devastating financial losses within the realm of decentralized finance.
The Avara founder noted the effects of the $100 million Harmony Horizon bridge hack in June 2022 as just one example of the dangers posed by bridge exploits. CryptoMoon reached out to Kulechov but was unable to obtain a response before publication.
Kulechov’s post mirrored a December 13 suggestion by the founder of the Aave chain, Marc Zeller, which aimed to dissuade Polygon users from utilizing Aave and ultimately phase out support in the long run.
As a researcher, I propose fine-tuning the risk factors associated with loans on both Aave v2 and Aave v3 within the Polygon network in such a way that it becomes less enticing for users on this network to deposit their funds into the lending protocol.
The other side of the story
In response to Aave’s leadership on social media, Sandeep Nailwal, the co-founder of Polygon, described the suggestion to cut ties as an attempt at monopolization.
Based on Nailwal’s statement, the leadership of Aave proposed a plan similar to Pre-PIP (Proposal for Improvement Proposals) to utilize stablecoins in the Polygon proof-of-stake bridge. This move was intended to create income-generating opportunities for the approximately $1.3 billion worth of stablecoins stored within the Polygon bridge. At first, Aave showed great enthusiasm about this prospect.
In simpler terms, Nailwal contended that the Morpho plan, though yet to gain widespread acceptance within the Polygon community, boasted a higher degree of decentralization and included rewards designed to stimulate growth and development within the Polygon ecosystem.
The compelling features presented by Morpho and Allez Labs’ proposal sparked increased interest and conversation within the Polygon community, surpassing the level of excitement generated by the rival proposal led by Aave’s team, as stated by Nailwal.
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2024-12-18 20:41