Aave, a decentralized lending and borrowing protocol built on the Ethereum blockchain, has announced it will scale its DeFi platform. Aave developing Layer2 scaling solution with polygon and bring the platform on several sidechains.
The summer of 2020 witnessed the rise of DeFi, leading to the massive expansion of assets on the Ethereum blockchain. The DeFi craze has not slowed down, with close to $43 billion of total value locked within DeFi lending platforms. While the future of DeFi seems promising, the demand for Ethereum and DeFi led to high transaction fees.
Although Aave noted that high fees are a feature of a successful public blockchain, the firm suggested that alternative solutions are needed. The DeFi lending protocol will be exploring scalable sidechains with Polygon — formerly known as Matic Network — to address the high transaction fees on Ethereum.
Currently, Aave developing Layer2 scaling solution with polygon to explore new frontiers.
Aave founder Stani Kulechov said DeFi was intended to create a more inclusive and sustainable alternative to traditional finance. However, he added: “That being said, DeFi was always intended to create a sustainable and more inclusive alternative to traditional finance. If DeFi is great but only limited to portfolios of five figures and up, DeFi will be falling short of its mission to finance for everyone.”
While Aave was built on Ethereum layer 1, the team will scale its platform to Polygon, a layer 2 proof-of-stake sidechain that runs alongside Ethereum’s network. Aave says that once its platform is available on Polygon, it will add its native asset (MATIC) to the list of collateral. At launch, the assets that will be used as collateral on the Polygon-based Aave market include MATIC, USDC, USDT, DAI, wETH, AAVE, and WBTC.
Also Read: AAVE: Deep dive into the DeFi protocol for liquidity
Polygon has additionally onboarded several other projects. It has attracted the NFT game Aavegotchi, the prediction market Polymarket, the betting platforms Decentral Games, the DeFi platform EasyFi, and the blockchain RPG game Neon District.
Aave added that it would use a smart-contract bridge that can seamlessly port assets from one network to the other, which will be made available soon. Aave will also have the highest standard of safety for the protocol price feeds, as Polygon is a network powered by Chainlink.