Aave DAO Passes Proposal to Deploy on Ethereum Layer 2 Metis NetworkAave, a leading lending protocol, has announced its decision to deploy version 3 (V3) on the Ethereum layer 2 ecosystem, Metis Network. The move comes after a unanimous community vote held on Aave’s governance forum, demonstrating strong support for the expansion.
Expanding Aave’s reach
The deployment of Aave on Metis is expected to boost market liquidity for both ecosystems and provide Metis users with access to Aave’s borrowing and lending features, such as earning rewards for supplying token liquidity to the platform.
Metis initially gained attention during the previous bull cycle due to its ability to offer users faster transactions at lower fees on the Ethereum network.
However, it has since been overshadowed by networks like Optimism and Arbitrum, which currently hold billions of dollars in tokens and boast thriving ecosystems compared to the $40 million on Metis.
To encourage further adoption following Aave V3’s deployment, Metis is offering liquidity incentives to users. The network plans to distribute 100,000 native Metis (METIS) tokens as a liquidity mining incentive for the protocol’s users on the network over a six-month period.
In addition, a token mining reward program will distribute 4,000 METIS to participating protocols based on the percentage of monthly transactions generated.
Innovative features for users
As a result of Aave’s deployment on Metis, users of both platforms will benefit from the combination of DeFi borrowing and lending services. Aave’s High-Efficiency mode, for example, allows users to borrow assets with less collateral.
The integration also improves risk management through supply and borrow caps, as well as siloed borrowing to reduce exposure to potential market contagion.
Aave’s Isolation mode expands the pool of collateral assets, while its Cross-Chain Portals provide access to a broader range of DeFi solutions. Furthermore, the Gas Optimization feature reduces transaction fees, further enhancing the user experience.
Aave has built a strong reputation within the DeFi space, boasting over $5.5 billion in total value locked in the protocol. Aave V3 was initially launched on Ethereum’s mainnet in January 2023 and subsequently on various Ethereum layer-2 protocols, including Avalanche, Arbitrum, Optimism, and Polygon.
Layer-2 scaling solutions gain momentum
The move to deploy Aave on Metis highlights the growing trend of decentralized finance platforms adopting layer-2 scaling solutions. Ethereum ecosystem participants are developing several zk-proof-powered layer-2 protocols, offering a variety of infrastructure options for platforms to scale.
Other prominent DeFi players have also embraced layer-2 solutions. The 1inch Network chose zkSync for its aggregation and limit order protocols, while Uniswap token holders voted in favor of deploying on Polygon’s zkEVM roll-up solution in April 2023.
The company’s decision to expand to Metis Network not only increases its reach but also signifies the importance of layer-2 scaling solutions in the evolving DeFi landscape.
As more platforms adopt these solutions, it becomes increasingly vital for the continued growth and success of the decentralized finance sector.
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