[Temp Check] Aave V3 MVP Deployment on Neon EVM Mainnet

[ACI]

Title: [TEMP CHECK] Aave V3 MVP deployment on Neon EVM Mainnet

Author: Neon Foundation & Aave Chan Initiative (ACI)

Date: 2024-01-15

Summary

This TEMP CHECK proposes the deployment of Aave V3 MVP on the NEON EVM Mainnet, expanding Aave’s presence and enabling access to unaddressed users, liquidity, community and ecosystem of Solana.

Background

Neon EVM is a fully compatible Ethereum environment solution built on the Solana blockchain which makes it the first parallelized EVM with direct access to Solana liquidity. Neon EVM allows developers to deploy Ethereum dApps on Solana and access its native ecosystem and network benefits: low fees, high transaction speeds, and parallel transaction execution capabilities without changing their codebases. Neon EVM currently has interoperability with Solana SPL tokens and the plan is to develop full interoperability with Solana smart contracts as well in 2024.

Solana is a thriving blockchain with a strong DeFi ecosystem and a large user base. Solana ecosystem took a hit due to market conditions and FTX situation last year as TVL fell from all-time high of +$9b to +$250m in July 2023 but since then it has shown strong growth and it’s the fastest growing ecosystem across major blockchain networks. Current TVL is over $1.5b making it the fifth-largest chain by TVL.

Motivation

Aave has emerged as a prominent player in DeFi lending across various EVM (Ethereum Virtual Machine) networks, including Ethereum, alt L1s, and L2s. Neon EVM wants to further support the mission of a multi-chain Aave and proposes deploying Aave v3 on the Neon EVM Mainnet to expand lending to the Solana ecosystem. Aave’s expansion to the largest non-EVM ecosystem will further reinforce its place as the top liquidity market on-chain and open up possibilities for growth and collaboration between the Aave, Solana, and Neon EVM communities.

Aave V3 deployment on Neon EVM will enable Aave to access the deep liquidity on Solana and enables Solana ecosystem users to get access to the premier lending protocol through Neon EVM. The platform will allow Aave to deploy on Solana without any reconfiguration of the Aave v3 codebase and hence without incurring major development efforts and costs to the Aave DAO. Also, a third-party team has already deployed Aave V3 fork on Neon EVM Devnet which implies the full compatibility of Aave V3 codebase with Neon EVM.

These benefits of Neon EVM combined with Aave’s impressive push for a cross-chain future, provide an exciting opportunity to capture the market share of Solana’s DeFi ecosystem and grow the user base and community of the protocol, increase TVL, and protocol revenue. At the same time, Neon EVM would benefit from having a trusted, flagship DeFi project like Aave on its platform, further diversifying and growing the DeFi options available to its users and wider Solana ecosystem.

The deployment of Aave v3 on the Neon EVM would enable Aave to tap into the Solana DeFi market and make a unique and significant contribution to the decentralized finance movement. This deployment is expected to substantially reduce costs and better scalability in comparison to EVM networks, while also providing users with access to Solana’s liquidity and the overall ecosystem. As Solana gains momentum as a prominent blockchain platform, the integration of Aave’s advanced lending and borrowing protocol could further catalyze the DeFi ecosystem on Solana and Neon EVM.

There have been significant concerns around the Downtime of Solana blockchain in the past but continuous innovation is happening within the ecosystem and new tools are rolling out on a continuous basis to make the network more resilient, efficient and scalable. For e.g. Firedancer by Jump Crypto.

Furthermore, the idea of Aave v3 deployment on Neon EVM was also recently mentioned by Stani and contributing teams like Aave Chan Initiative (ACI). Tweet by Stani, Tweet by Marc Zeller

Additionally, Neon EVM also recently announced the launch of Neon Points Program to attract users and builders to accelerate the adoption of the network. We will include Aave in our points program to incentivize user activity on Aave v3 on Neon EVM with boosted points.

Specification

This proposal suggests deploying Aave V3 on Neon EVM Mainnet with limited deployment of initial assets and conservative risk parameters.This approach will enable Aave to strategically establish a presence in the Solana ecosystem while minimizing risk exposure.

The proposal suggests three collaterals (SOL, mSOL, jitoSOL) and one borrowable asset (USDC) with no isolated mode, e-mode enabled for correlated assets (SOL, mSOL, jitoSOL), conservative LTV and supply, borrow caps. If this proposal is to pass, we will conduct a comprehensive technical risk assessment for the suggested assets at the ARFC phase to determine their risk parameters. We also invite risk service providers and community members to provide their analysis.

Infrastructure

Documentation: Neon EVM Docs

Compatibility with Ethereum RPC endpoints: Neon EVM supports almost all standards. Here is the link to supported JSON-RPC - Neon EVM Docs

Indexers: theGraph

Oracles: Chainlink, Pyth

Wallets: Metamask, Ledger and support other EVM network wallets.

Block explorers: NeonScan, Blockscout

Address formatting: It is the same as the standard Ethereum address.

On-chain multi-signature infrastructure: Friendly fork of Gnosis Safe.

Cross-chain Interactions: deBridge (announcement, expected to go live on Mainnet in January)

NeonPass: NeonPass links Solana and Neon EVM to provide a smoother EVM-compatibility experience for end users (https://neonpass.live/). NeonPass is the revolving door of liquidity between Solana and Neon EVM. NeonPass is not a bridge connecting two separate blockchain ecosystems. Rather, it acts as a two-way transfer tool for bringing assets in and out of the Neon EVM platform, which itself is a Solana smart contract directly connected to the network.

Disclaimer

This proposal is powered by Skywards. The Aave Chan Initiative is not directly affiliated with Neon Foundation and did not receive compensation for creation this proposal.

The co-author is a team member of Neon Foundation and holds SOL, NEON tokens.

Next Steps

1. Temperature Check: Gather community feedback and assess sentiment towards the proposal of deploying Aave V3 on Neon EVM and proceed with Snapshot if positive.

2. ARFC: If the Temperature Check Snapshot indicates positive sentiment, proceed to the ARFC stage for further discussion, risk parameter evaluation network analysis and finalization of the proposal.

3. AIP: If the ARFC stage Snapshot is successful, submit the proposal as an AIP for voting and on-chain governance approval.

Copyright

Copyright and related rights waived via CC0.

[Albierto]

As a user of Aave, I must express my strong opposition to this proposal, and here are my reasons for it. Firstly, before any Aave deployment is considered, it’s crucial for the Neon team to enhance their Total Value Locked (TVL). Currently, as per DeFillama, their TVL is at a modest $1.53M since their mainnet launch in July 2023, and there are only four dApps deployed on it. Notably, Moraswap, which holds the largest TVL share, seems to be a straightforward fork of Uniswap V2. Aave traditionally adopts a very cautious stance in deploying on new chains, and I believe our resources would be better allocated elsewhere.

Secondly, Neon’s infrastructure appears to be inadequate. The Chainlink official documents do not mention any Data feeds for Neon. In terms of Safe, they are utilizing a friendly fork, and their bridging solution currently revolves around DeBridge, with no immediate plans to integrate Wormhole or Axelar. Furthermore, the implementation of DeBridge itself is, to my understanding, incomplete. Adding to this, a look at their Discord suggests that Neon’s EVM is dealing with ongoing technical and performance issues, with no resolution expected for another one to two months.

Thirdly, the track record of Neon’s founding team is a point of concern. An article on Forklog, in Russian, discusses how these founders had to shut down a previous project due to the absence of a product-market fit: Блокчейн-соцсеть Commun закрылась из-за отсутствия пользователей. This history raises fears that Neon might face a similar fate, especially considering the ongoing complaints within the Neon Discord community about the founders’ lack of communication, their passive issue resolution, and a general lack of transparency. These factors make me skeptical about the team’s capabilities as highlighted on their website (https://neon-labs.org/).

I recommend that the Aave community adopt a ‘wait and watch’ approach towards Neon and closely observe how their founding team handles issue resolution and transparent communication. As Aave, our focus should be on deploying on more established chains where we can better allocate our efforts. Personally, I am in favor of deploying directly on Solana rather than on Neon EVM. While I acknowledge that deploying on another L1 chain has its risks, Solana is a more mature platform with most of the necessary infrastructural elements in place. In contrast, Neon has significant room for improvement in terms of increasing its Total Value Locked (TVL), enhancing its infrastructure, and improving transparency.

[DNeD]

This is great news. Great to see Aave look ahead to the future, utilizing the speed and low gas fees on a proven chain like Solana.

Neon seems like the only Parallel EVM right now that is live and working. Should only get more optimized as the year goes on. The team has been quite active at conferences too, so good to see they have a physical presence as well.

[EzR3aL]

I never really got into Neon EVM but this needs to be checked. If any of these claims are true then the DAO should maybe really consider to wait till all red flags are gone.
Will do my due dilligence on this one.

Thanks for raising these problems.

[Hiroyam]

There are currently a lot of issues mentioned with Neon EVM, and I think it’s only a matter of time before these issues are resolved. If the EVM trend comes this year, I think the one I’m most looking forward to is Neon EVM. Their aggressive development will greatly benefit Aave.

[Daniel-Neon]

To be clear, I am Daniel working on growth at Neon, and also a user of Aave. This reply really misses the point of this initiative, is dishonest, at best misrepresenting facts, and lacks understanding of what Neon actually is from a technical level.

First, Neon is an EVM on Solana. Technically this means that Neon is a dapp on Solana. Storage, execution, consensus, all is Solana; Neon is just translating the user read and writes in and out of EVM. So the notion that Neon is some how separate or isolated from Solana is false. Furthermore because of this technical architecture it allows Neon to natively interop with Solana meaning developers can write Solidity smart contracts that interact with programs on Solana. Currently this works and we have examples for ERC20 <> SPL, ERC721 <> Metaplex, Neon access of Solana native oracles, and a lot more to come with arbitrary contract invocation and accessing state compression. This will open up Aave to the all the innovation going on on Solana and allow for cross VM integrations with SVM apps, a huge unlock.

Second, considering that Aave v3 has already been deployed on Neon Devnet by a third party team, verifying compatibility, and the Neon team is set to offer liquidity and incentives your implication that this will be loss of resources is incorrect. Also Neon allows for the current code and dev environment to be unchanged for deployment meaning very low overhead. An SVM deployment on the other hand would incur an actual cost and large increase in operational overhead. Neon is the simplest path for Aave to access Solana growth.

Third, the points on bridging, oracles, performance, and team comms, are completely misrepresented and perhaps disingenuous. For bridging users currently use Neon Pass which is native between Neon and Solana, technically this is just like depositing and withdrawing from a smart contract as Neon is a program on Solana, deBridge is our bridging solution which will be live in Jan, is a top bridge into Solana and brings 1 click native asset transfer between 11 chains including all the top EVM environments. For oracles as mentioned earlier this is part of interoperability with Solana and we have several sections on how this works in our docs meaning if an oracle supports Solana then it support Neon, therefore Chainlink is supported. On the performance side, when Solana has high load at the same time Neon has high load, specifically on the same contract for specific types of apps like DEXs, gas prices can go up and confirmation times can go up. This is not an “issue” this is by design and standard for blockchains under high load. Even in these scenarios all dapps work properly. Regardless team has several improvement set to be implemented before a mainnet Aave deployment would even happen to address this. For team comms I mean the team has been building in public for over 2 years now, doing AMAs, podcasts, interviews, sponsoring and attending all major conferences, hosting events, participating in all major hackathons, etc. The entire time. So the claim that team and founders are not communicating is just false. The other points about team are just unfounded, speculative, and personal attacks.

Overall Neon poses simplest route to accessing the growth and adoption of Solana for Aave.

[Albierto]

Hey Daniel! Great meeting you!
I sincerely appreciate your insights and respect your points. As an Aave user and a fan of the protocol, my primary concern is to maintain a high level of transparency and communication regarding requests for deployment on various chains. You pointed out that some facts are being misrepresented; however, I want to clarify that my objections were based on my personal reasoning, which I clearly outlined in my argument against the deployment. Now, let’s delve deeper into this. :)

1. You referred to future developments like ‘arbitrary contract invocation and accessing state compression’. Could you please provide a timeline for when these features are expected to be implemented? Are we looking at a timeline of the next two months, or is it more likely to happen next year? We are interested in concrete plans rather than vague promises.

2. You also stated that the Neon team plans to provide liquidity and incentives. While you suggest that this won’t be a waste of resources, could you specify the exact amounts involved? Without this information, we risk venturing into the realm of uncertain commitments, and I believe it’s crucial for every DAO member to be informed about these figures.

3. Additionally, I’d like some clarification regarding the low transactions per second (TPS) rate displayed on Neonscan (https://neonscan.org/). What explains this figure?

4. Furthermore, you mentioned that ‘if an oracle supports Solana, then it supports Neon, hence Chainlink is included.’ However, I’m puzzled by a statement in your own documentation (https://docs.neonevm.org/docs/developing/integrate/oracles/integrating_chainlink), which says, “Chainlink is implemented as a smart contract on Neon EVM, making Chainlink data feeds from the Solana network available for smart contracts to consume.” Why is Chainlink implemented in this manner on Neon EVM? Who is responsible for managing and auditing these smart contracts?

5. You pointed out that my remarks about the team and founders are speculative. However, my primary concern is with the founders’ level of engagement. Can you inform me about the last time the founder actively participated in an AMA session, hosted ecosystem townhalls, or directly addressed community questions? Additionally, where can we find any recent activity from the founder/CEO’s X account? Please provide specific dates; I am seeking concrete information, not mere speculative discussions.

Furthermore, regarding the article on Forklog, I would like to know if you deny or acknowledge its content. This isn’t a personal attack, but rather a part of my research that reveals the involvement of NeonLabs’ current CTO and CEO in that mentioned project. Thank you once again, and I eagerly await detailed information and data, not generalities.

[Daniel-Neon]

You have a pretty new account for such passion on Aave ecosystem deployments, but to address your points:

1. Planned Q2 2024

2. $1m USDC as supply side liquidity + boosted points in Neon Points program.

3. Low relative to what, Neon is the only parallelized EVM live on mainnet in the market and the only EVM on Solana. Again I think you miss the point of this initiative. Neon is the lowest friction access point to Solana for Aave. You continually isolate Neon from Solana. There is more and more applications coming to Neon already announced 3 so far this year with several more this month all being deployed on mainnet. Regardless live tps does not reflect capacity and neither are a bottle neck or barrier for Aave to deploy

4. Not sure what is puzzling it is pretty clear. We have a wrapper contract that interacts with a precompile on NeonEVM that reads the data from Solana. This is managed by Neon team and has audits, you can find them here: neon-evm/audit at develop · neonlabsorg/neon-evm · GitHub. I suggest joining our discord for all your technical questions we have active engineers answering questions all the time there: Neon

5. This is a non serious and disingenuous point that I already addressed but again Yury, Andrey, and Marina have given many public talks, they go to meetups that Neon hosts, they go to all the major conferences that we sponsor, they do press interviews, podcasts etc. Culturally twitter is not really as important as it is in the west and crypto is much bigger than just twitter. That said as growth at Neon we realize the benefits of having mind share on twitter and are addressing this but this really has nothing to do with Aave deployment.

6. Again this has nothing to do with deploying Aave. I am not familiar with the article or any of the info. I guess some team members worked on a crypto social network many years ago that did not find product market fit, so with this you are suggesting the team will quit or something. Just to remind you Neon is a part of the Solana community and when FTX happened Solana had the biggest downturn and collapse in crypto since the Ethereum DAO hack. Solana was a wasteland during this time majority of the teams quit, returned funds, or left crypto all together Neon was one of the few teams that stuck with it and grinded through the entire bear market, which included an actual war that relocated most of the team, and successfully deployed mainnet. If the team was to quit and walk away they would have been done it long ago. Also Neon is 55+ members on the team backed and supported by Jump, CyberFund, Solana, and top founders across categories in Solana in and Ethereum.

[Albierto]

Hello Daniel,

Thank you for responding to my queries. However, the age of my account and my passion for Aave shouldn’t be a point of concern.

1. I appreciate your response, but it’s still unclear whether the timeline is for April or June.
2. The provision of 1 million as a supply side is acceptable, though not particularly substantial. Could you please incorporate this figure into the proposal? Also, you didn’t address my question about incentives. Using Neon points doesn’t equate to liquidity mining incentives, as points are typically employed by projects that haven’t issued tokens yet.
3. Unfortunately, you didn’t directly answer my query; it seemed more like you evaded it.
4. It’s good to know that the integration is managed by the Neon team and has undergone audits. However, why isn’t this managed by the Chainlink team, and why isn’t it included in Chainlink’s official documentation?
5. Why do you consider it disingenuous to inquire about the founder’s social media presence? It’s a valid concern. Saying that Twitter isn’t culturally significant doesn’t hold, as many founders in this space from Russia, Ukraine, and similar regions are highly active on social media. Even if, for argument’s sake, we accept that it’s not important for Neon, it remains a concern.
6. Let’s put aside the Forklog article for a moment. I’ve researched your background and found that you’re a co-founder of AngelDAO. Neon is listed as a portfolio project on AngelDAO’s website (https://angeldao.org/). Didn’t your investment process involve a thorough examination of the team’s track record? Also, as an investor in Neon Labs, your active involvement as head of growth seems like a potential conflict of interest.

I would like to request @MarcZeller to review these issues closely. All these points seem problematic, and given Marc’s significant contributions, I think he should pay special attention to them. In my view, the Neon team’s lack of transparency is not in line with the core values of the Aave DAO, and this is a major concern for me.

[0xkeyrock.eth]

We’re supportive of this deployment and appreciate the $1m USDC commitment from the NEON team.

[narasimhadev]

Looks like you have your personal interest, by trying to show NEON in the bad light.

NEON is cutting-edge technology with its pros and cons ofc and this could be the topic for communication but you are shifting the talk to the personal twitter of CEO which is unacceptable. Not every CEO is active on twitter and you suppose to know it.

But you dont speak about great achievements NEON succesfully had for the last year, like a mainnet launch, quick community growth, partnerships etc.

[koma]

Hello Albierto,

Could you please tell me, at what point the activity of founders on Twitter became a key metric for assessing the suitability of a project for AAVE deployment?

All this looks as if you have something not against the project itself, but against the people who stand behind it. I’m not sure that discussing a proposal is the best place to settle your personal scores.

[Albierto]

Hello Koma,

I’d like to emphasize that my concerns encompass both technical and social aspects, not just the latter. When considered together, these factors collectively contribute to my apprehensions. I don’t feel that Daniel has fully addressed the specific technical questions I’ve raised. Given this, I firmly believe that the Aave community should approach the situation with caution and insist on greater transparency from the Neon team. I hope this clarifies my position and hence, I have tagged Marc to peruse it further.

[DNeD]

Given Parallel EVM seems to be a strong and emerging narrative this year and the significant upside to exploring this MVP, it’s surprising that anyone would be so against it with such passion.

[alex_deBridge]

Hi Albierto, Alex - co-founder of deBridge here. Not sure what you mean by “the implementation of DeBridge itself is, to my understanding, incomplete”, so would appreciate if you could clarify.

Also wanted to provide a few facts about deBridge as I think we managed to build one of the most secure and stable cross-chain infrastructures in space

1. Unlike some other bridges that you mentioned, deBridge since inception has had 100% uptime without any security incidents and discovered vulnerabilities
2. deBridge team pioneered cross-chain intents and built DLN — a cross-chain trading infrastructure based on a 0-TVL approach that avoids liquidity pools making value transfers more secure by design.
3. DLN is the fastest cross-chain value-transfer infrastructure. Most bridging operations are fulfilled within seconds, some even take milliseconds
4. deBridge messaging will be able to fulfill all Aave’s cross-chain governance needs while DLN can enable limitless cross-chain inflows of liquidity into Aave’s deployment on Neon

[Jasony]

Hello Albierto.
I respect your opinion, but you seem to have an unfair point of view for NEON EVM.

It seems like you have personal feelings about the Neon team. The team members possess diverse technical solutions, come from 50 different countries, work tirelessly 24/7, and I have never encountered such a passionate team before. Why do you repeatedly express your personal feelings and curiosity in Discord and proposals?

[Cryp_rocat]

We have to think about why he repeately posts just one side and it is awsome team replys from hin more detailed. the attitude and comments from team already prove his delustion

[SMIRNOFF]

Hey Alberto You definitely have a personal feeling for the neon team. The team members have a lot of potential and technical solutin, consisting of various national members from 50 countries, etc., are working hard 24/7, and I’ve never seen a passionate team like this. Why do you keep writing about your personal feelings and questions on Discord and these profiles over and over again!!

[Rach]

It seems like you have personal emotions against the Neon team, attempting to criticize the entire project. Otherwise, you wouldn’t have posted lengthy writings filled with inaccurate information and personal opinions here. Despite Daniel’s efforts to explain, it appears you are not making an effort to understand. I hope you reconsider whether your actions contribute to the development of Aave.

[HWIKKI]

I’ve been holding onto NEON since the beginning, observing its progress. While there have been some challenges, it’s typical for early coins and will likely be resolved soon. The development team has the capability and is actively addressing issues. Whether you’re raising legitimate concerns about NEON or engaging in malicious rumors with the team is unclear, but it’s important not to harm honest investors. Need more attention? Raise it elsewhere, not by causing a disturbance here.