Deploy AAVE v3 on Polygon Network

Proposal for the deployment of Aave V3 on the Polygon PoS Chain.

TL;DR Polygon offers unparalleled liquidity utilization, low gas fees, and very high transaction speeds – thereby allowing Aave v3 to reach maximum efficiency and efficacy. We host a rapidly growing number of DeFi protocols, increasing DAU, and we have just launched our DeFi For All campaign – a $15 million initiative to increase the role of decentralized finance to the future of web3. We believe that the community and devs of the Aave v3 protocol will immensely benefit from all that Polygon has to offer, and deployment will only reap success.

Proposal

In March 2021, in light of the high gas fees imposed on Ethereum transactions, Aave had a successful v2 deployment on the Polygon PoS chain – our low gas fees, accessibility to NFT markets, and our native DeFi protocols allowed Aave to have tremendous success.

Under the umbrella of our DeFi For All campaign, we’ve expanded greatly into the DeFi and DeFi 2.0 markets and experimented with derivatives, stablecoins, and new-age DEX protocols – and we’re excited to explore this next chapter with Aave. This is what we offer, and what Aave v3 can take advantage of:

  1. Liquidity Utilization: Across top liquidity pools on Uniswap, Polygon has the highest volume traded, and greatest liquidity utilization. This trend was seen through comparison of similar liquidity pools as well, where the volume-to-TVL percentage was significantly higher than competitors.
  2. Low gas transactions: Polygon PoS is committed to maintaining low gas fees for users and protocols. New users never have to worry about
  3. Scalability: We’ve grown to support over 4500 dApps, our TVL skyrocketed 1000x from $4.7M to $5.7B, and this growth shows no signs of slowing down.
  4. Users: We have 566000+ daily active users, which is vastly greater than many other L1 and L2 competitors.
  5. DeFi For All: This $15M program will support specific liquidity mining (LM) and protocol development efforts and will reward projects based on on-chain metrics. More details here

The campaign first started when Aave v2 launched on the Polygon PoS Chain. Polygon set aside 1% of MATIC tokens, for Aave’s LM program in April 2021 to generate a healthy supply of assets on the lending pools. In just a month, the TVL on Aave-Polygon grew 100-fold to about $5 billion and stayed in that range since. The Polygon money market accounts for half of the revenue contribution to Aave from its various multi-chain deployments. As that program winds up, emissions will be lowered every two weeks starting Jan. 25.

Aave v3 can benefit from the DeFi For All campaign, and could hopefully see growth similar to v2 in 2021.

Conclusion

Polygon is a rapidly growing “internet of blockchains”, and one on which we hope Aave v3 could consider deployment. Our capital-efficiency, gasless transactions, and scalability could bring tremendous value to improve an already revolutionary protocol in Aave v3.

We will focus on an efficient migration from Aave v2 to v3 and replicate the prior success.

Reference - A great read by our internal research team on Stablecoin adoption on AAVE v2.

4 Likes

Hey guys, my name is Ryan and I am the Aave protocol lead for the Rabbithole metagovernance voting workstream!

This proposal looks awesome, and I would love to see this relationship continue to be fruitful for all parties! The value that Polygon has brought to Aave in the past is substantial, to say the least (currently at $6.2B TVL!). Polygon continues to see massive growth as well, with little signs of slowing down. This relationship should continue to bring more users to the Aave protocol!

Additionally, With Aave aspiring to develop cross chain reach, it would be very strategic to deploy V3 to chains that have a massive amount of users such as Polygon!

The combination of a cost efficient network such as Polygon, and a highly esteemed protocol such as Aave, provides many benefits for users!

One of the primary goals of Rabbithole metagovernance is to vote on proposals that bring forth a positive sum outcome. This proposal definitely appears to be positive-sum to me, and I will be recommending that the RH community vote in favor of this!

2 Likes

@capncook surprised this proposal has not been posted earlier - but welcomed nonetheless!

I enjoy this reminder of Polygon’s capabilities and successes:

While the cost becomes less of a competitive advantage as more users flock to the network, I have been impressed by Polygon’s durability and international acclaim.

@raho this has been on the V3 roadmap (see Introducing Aave V3) for a bit and I am excited by the team’s willingness to execute on it.

Also FYI there have been early discussions of templating this sort of ARC. You can see the discussions, proposed frameworks, and next best steps here if you chose: [ARC] Aave V3 network integrations process

2 Likes

This is a no-brainer for me.

Let’s continue with V3 the synergies we had on Polygon.

complete support.