Aave, a major decentralized finance (DeFi) lending protocol, is reportedly considering expanding to Polygon zkEVM, a scaling solution set to release its mainnet beta version on March 27th. According to a governance proposal created by Marc Zeller, Aave’s Integration Lead, Polygon zkEVM’s implementation could be used for the deployment of Aave v3’s minimum viable product (MVP), with the goal of increasing its presence in new and highly anticipated markets.
Aave is a top product in the DeFi lending sector, allowing users to borrow stablecoins and other tokens by using their own tokens as collateral, as well as earn interest by locking up their assets in smart contracts to provide liquidity. According to data from DeFillama, the total value locked (TVL) across seven networks, including Ethereum (ETH), is approximately 620 billion yen ($46 billion) as of March 3rd, 2023.
To implement Polygon zkEVM, Aave plans to limit the use of three cryptocurrencies as collateral and set more conservative risk parameters. The considered cryptocurrencies include Ethereum (ETH), Polygon’s (MATIC) wrapped token, and the US dollar stablecoin USDC, which is expected to be the only asset available for borrowing.
Furthermore, the proposal suggests that Aave may explore launching its own stablecoin, GHO, on Polygon zkEVM in the future. Polygon zkEVM, previously known as Polygon Hermez, is a layer-two scaling solution based on zero-knowledge proofs (ZK rollups), which aggregate transactions off-chain and store only the generated cryptographic proof on the Ethereum (L1) blockchain, providing fast finality and enabling high-volume transaction processing at a lower cost.
Polygon zkEVM is designed to emulate the Ethereum Virtual Machine (EVM), making it easier for developers to deploy Ethereum-based applications on its platform using familiar tools like the MetaMask wallet. It launched its final testnet in December 2022, and DeFi projects such as Aave and Uniswap, social platform Lens, and game studio Midnight Society were among the participants.
If Aave does decide to expand to Polygon zkEVM, it could potentially help improve the platform’s transaction processing speed and reduce fees, making it more accessible to users. It could also help Aave gain a competitive advantage in new markets and expand its reach in the DeFi ecosystem.
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