Aave Considers Dropping Support For Polygon Markets

According to Cointelegraph, Stani Kulechov, CEO and founder of Avara, the parent entity of Aave companies, has recently supported a proposal to discontinue support for Polygon markets on the Aave platform. This proposal emerged following an early-stage Polygon improvement proposal (PIP) from Allez Labs and Morpho, which suggested using stablecoins in Polygon's proof-of-stake Portal bridge to generate yield. Kulechov expressed concerns over the safety risks associated with the proposed Polygon improvement, citing bridge exploits as a significant threat to Aave. He referenced the $100 million Harmony Horizon bridge hack in June 2022 as an example of the potential dangers posed by such exploits. Despite attempts to reach Kulechov for further comments, Cointelegraph was unable to obtain a response before publication. The proposal aligns with a previous suggestion by Aave chain founder Marc Zeller, who recommended discouraging Polygon users from utilizing Aave and eventually ceasing support. Zeller proposed adjusting the risk parameters of loans on Aave v2 and Aave v3 on the Polygon network to deter users from depositing funds into the lending protocol. In response, Polygon founder Sandeep Nailwal criticized Aave’s leadership on social media, labeling the proposal to sever ties as "monopolistic." Nailwal highlighted that Aave had initially shown enthusiasm for providing yield-bearing opportunities for the $1.3 billion in stablecoins held in the Polygon bridge. He argued that the Morpho proposal, although generally rejected by the Polygon community, was more decentralized and included incentives to foster project development within the Polygon ecosystem. Nailwal noted that the attractive features of the Morpho and Allez Labs proposal had garnered more attention and support within the Polygon community compared to the competing proposal from Aave's leadership. This ongoing debate highlights the complexities and challenges faced by decentralized finance platforms in balancing innovation with security.