Aave to debut on Linea following fork rival ZeroLend’s controversy

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As a seasoned researcher with over two decades of experience in the crypto space, I’ve seen my fair share of forks and expansions. The Aave community’s decision to deploy its V3 protocol on Linea, following a rather divisive vote, is an interesting turn of events.

In simple terms, after a community decision, Aave is preparing to deploy its system on the Linea platform, which has been several months since a forked version of it encountered examination on the same network.

The Aave community has approved plan #5ae27, which proposes launching the Aave V3 system on Linea, a zk-rollup network backed by Consensys. This proposal, initially put forward on November 19th, received massive backing, with over 636,000 AAVE tokens voting in favor, indicating a significant drive for Aave to expand its influence in the decentralized finance sector.

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Why Linea

Linea represents a second-tier system running on the Ethereum blockchain, driven by a zero-knowledge Ethereum Virtual Machine. Created by Consensys, Linea endeavors to address typical challenges in Ethereum, such as sluggish transaction speeds and expensive fees.

One unique advantage that Linea has over its rivals lies in its seamless integration with various products owned by ConsenSys. To illustrate, ConsenSys manages MetaMask – a non-custodial cryptocurrency wallet, as well as Infura, a provider of blockchain infrastructure.

Utilizing MetaMask’s 30 million active users may provide Aave with a substantial chance to access a broader user pool. Nevertheless, it’s unclear if this expansion will prove sustainable over the long haul. Currently, the Linea network boasts nearly $450 million worth of value locked, as per DefiLlama’s data.

What it means for Aave

Aave plans to enhance scalability, speed up transactions, and reduce costs for its users by extending to the network called Linea. Furthermore, the integration of their GHO stablecoin protocol with MetaMask’s debit card is planned on this network, but specific details about this feature are currently unclear and appear more like a sneak peek at the moment.

It’s important to point out that Aave is currently one of the top DeFi protocols, handling more than $21 billion in total value locked (TVL) across 12 blockchains. This figure only trails Lido, another staking protocol, which has over $36 billion in TVL according to DefiLlama’s data.

Linea’s zk-rollup technology might significantly contribute to enhancing the efficiency and affordability of Aave’s offerings. In fact, Aave is considering distributing ecosystem rewards, like stablecoin incentives, to motivate users to adopt Linea.

The Shadow of ZeroLend

It’s noteworthy that Aave has recently expanded to Linea, and this move follows closely after ZeroLend, a competitor, tried something similar. Interestingly, ZeroLend – which seems to be a spin-off from Aave – encountered criticism and turmoil earlier this year. The issue was that many critics viewed it as a hastily made copy of Aave, with one delegate in the governance process even labeling it as “Aave’s codebase with a high inflation token added on top.

As a researcher, I find it concerning that the most prominent protocol on the ConsenSys line seems to be a direct copy of Aave, with one key oversight – the documentation links still point back to Aave’s documentation. It would be beneficial for the Ethereum community to pause for 30 days and critically evaluate the materials they are distributing globally, ensuring all necessary changes are made. Maintaining a clean and accurate house is essential for fostering trust and confidence in our work.

— imajin (@majinsayan) July 6, 2024

As a researcher, I found myself embroiled in a heated situation when users discovered that our mobile site was being redirected to Aave’s FAQ section. This revelation, reported by Protos, stirred up some controversy. However, amidst this turmoil, ZeroLend successfully amassed over $250 million in Total Value Locked (TVL) on Linea, which equates to more than one-third of the network’s entire TVL at that moment.

Governance and next steps

The concern about suggesting Aave V3 for Linea lies in its apparent strong support from a single entity: the Aave Chan Initiative, who influence governance discussions within the Aave community. Notably, they are also the authors of the proposal. Nevertheless, it remains unclear how the broader Aave community will react to this potential expansion in the future.

As an analyst, I’ve observed that a significant chunk – approximately 58% – of the voting influence within this proposal seems to be centralized in one address, which appears to be associated with the Aave Chan Initiative. Another delegate, going by the pseudonym “ezr3al.eth,” has contributed nearly a quarter (24.3%) of the total voting power, backing this same proposal.

On Linea, Aave could take advantage of its rapid transaction processing and quick confirmation times, leading to more efficient transactions and lower gas costs,” ACI stated in their proposal explanation. Importantly, they clarified that no remuneration was received for drafting this proposal.

The upcoming actions will focus on collaborating with development teams to carry out the deployment on Linea. Previously, risk parameters for tokens such as Wrapped Ethereum (WETH), Wrapped Bitcoin (WBTC), Circle’s stablecoin USD Coin (USDC) have been set and designed. This is aimed at enhancing the protocol’s security and performance on the new network, ACI asserts.

The price of AAVE didn’t seem to be significantly affected by the recent news, currently standing at $282.74, representing a modest 0.05% drop over the last day.

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2024-12-11 20:46