【Polygon vs Aave】Aave, the No. 1 TVL on Polygon, suggests withdrawal after certain governance proposals by Polygon!?
Aave suggests pulling out of Polygon, Lido officially announces withdrawal What's happening to Polygon?
Good morning.
Mitsui from web3 researcher.
Today's article is titled "Polygon vs Aave".In response to Polygon's most recent governance proposal, Aave suggested that Polygon withdraw from the market, and we will explain what is going on here.
Yesterday's article on AI Agents was very well received, and we are running the newsletter with the swing of introducing such trending projects as well as providing commentary on blockchain governance proposals.We hope you will find it an opportunity to enjoy web3 from all angles.
🟣12/12, a governance proposal was submitted to Polygon
🔵12/13, Aave suggests Polygon pullout
🖊️Polygon's proposal withdrawn but criticizes Aave's move
💬Governance is very tasteful
🟣12/12, a governance proposal was submitted to Polygon
The trigger was this submission submitted to Pre-PIP on December 12.
Pre-PIP is a pre-check function for Polygon Improvement Proposals, which are proposals that are implemented to get a sense of the community's temperature and receive feedback before being put to a full-scale governance vote.
The "Proposal to manage the Polygon PoS bridge fund" was submitted there.
Polygon currently has $4.687b in bridge funding.Of this, there is approximately $1.3b in bridge funding for the stable coins DAI, USDC, and USDT.Would you like to invest this stable coin bridge fund?"The proposal is that.
The three proposing entities are.
Allez Labs: web3 risk provider
Morpho: DeFi Lending Protocol
Yearn: Rewards Program Manager
The logic of the proposal, in brief, is as follows.(Please see original governance proposal for details as it is simplified)
Stable Coin reserves are gradually allocated to ERC-4626 Vaults specific to each asset type
DAI reserves are held in Maker's sUSDS Vaults, while USDC and USDT utilize Morpho Vaults.
These vaults are risk managed by Allez.
The revenue generated is sent to the Yearn Reward Contract in Yearn
From there, they are moved to the Polygon Ecosystem Vault and strategically deployed throughout the Polygon PoS and AggLayer.
The flow is organized as follows
Earnings yield: stablecoin → ERC-4626 Vault (e.g. yeUSDC) → Morpho Vault or sUSDS → generates yield (approx. 7% per year)
Distribution Yield: revenue → Yeran → bridge to Polygon PoS → deposit into Polygon ecosystem vault → reward users/projects → DeFi growth in Polygon PoS and AggLayer
Based on these factors, here is a brief summary of the proposal.
There are approximately $1.3 billion in stable coins in the Polygon PoS that are idle.
This equates to an opportunity cost of approximately $70 million per year if it were put into a secure operating strategy.
Operational revenues would be returned to the Polygon PoS and the entire AggLayer DeFi ecosystem.
While at first glance this proposal sounds good, it has been the subject of concern from the community as well as intense criticism from Aave.
🔵12/13, Aave hints at Polygon withdrawal
Immediately following this proposal within Polygon, a proposal was implemented within Aave suggesting a withdrawal from Polygon.
Created by Marc Zeller, founder of the Aave Chan Initiative, an entity that contributes to Aave's DAO, the proposal aims to phase out Aave's lending protocols and protect them from potential future security risks.
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