Written by: Yangz, Techub News
Recently, Marc Zeller, founder of Aave Chan Initiative (ACI), initiated a community proposal suggesting adjustments to the risk parameters of Aave V2 and V3 on Polygon, explicitly "encouraging migration from Polygon." As the application with the highest total value locked (TVL) on Polygon (DeFillama data shows that at the time of writing, the total TVL on Polygon is approximately $1.21 billion, of which about $450 million is provided by Aave), this move by Aave immediately drew industry attention and sparked a verbal dispute between the Polygon team and the Aave team.
Polygon co-founder Sandeep Nailwal accused Aave's leadership of "sour grapes," stating that "this behavior is extremely monopolistic and anti-competitive, and does not align with the spirit of Web3." Aave founder Stani Kulechov responded that Polygon's actions were actually "the villain's first complaint," quickly spreading rumors and "shifting blame" to Aave's leadership in the face of widespread user opposition.
So, what is the root cause of this sudden verbal dispute? The reason for it all stems from a Pre-PIP improvement proposal released by the Polygon community.
On December 12, Allez Labs collaborated with DeFi protocols Morpho and Yearn to draft this proposal. The proposal states that there are approximately $1.3 billion in stablecoin reserves (DAI, USDC, and USDT) idly sitting on the Polygon PoS cross-chain bridge, which, based on current benchmark lending rates, translates to about $70 million in wasted annual yield. Therefore, the three parties proposed to deploy these stablecoin reserves into various yield-generating lending protocols and initiate new ecological incentive plans to expand the DeFi ecosystem of Polygon PoS and AggLayer.
Specifically, the proposal suggests converting DAI into Maker's sUSDS and depositing USDC and USDT into Morpho Vaults to earn yields. Additionally, Allez Labs will act as risk managers to conduct risk analysis on subsequent potential Morpho Vaults. Yearn will serve as the manager of the ecological incentive program, creating a Polygon ecological Yearn Vault for each approved asset and rewarding the depositors of these Vaults with yields derived from the Morpho market and sUSDS strategy.
At first glance, this proposal seems to be unproblematic. However, from Aave's leadership perspective, the proposal hides "huge risks." On the surface, as reflected in various examples of cross-chain bridge vulnerabilities cited by Marc Zeller that have caused losses to the DeFi ecosystem, this proposal poses a financial security risk for Aave. Furthermore, as everyone can see, the initiators of this proposal are the three main beneficiaries of it. As the application with the highest TVL in the Polygon ecosystem, Aave may feel a sense of being "overlooked" or "betrayed."
Moreover, Stani Kulechov pointed out in his response that this proposal is actually the result of a "secret agreement" between Polygon and the aforementioned three parties, and there are reports that Polygon has completed a massive token transaction as a result. Stani Kulechov stated that Polygon users have expressed dissatisfaction with this proposal from the beginning, while the Polygon leadership only today "hypocritically" claimed that they do not support the proposal, which is merely "making excuses." Aave DAO proposed the "exit from Polygon" proposal to protect user asset safety.
However, this proposal aimed at "protecting user security" is viewed by Polygon as "sour grapes." Polygon co-founder Sandeep Nailwal stated in response to this matter that when this proposal was first submitted for discussion, Aave's leadership strongly lobbied to ensure that cross-chain funds would be deployed on Aave. During the public request for proposals process on the Polygon governance portal, Aave's leadership also held multiple meetings and invited Polygon Labs' leadership to various dinners and presentations to garner Polygon Labs' support, and "chose Aave" as a stakeholder in the cross-chain process. Additionally, Aave also released relevant proposals, but they did not spark widespread discussion in the Polygon community. In contrast, the proposal from Morpho (Aave's main competitor) received more support from community members.
Nailwal stated that Aave "ignores the security measures already in place, more like 'sour grapes.' Ironically, this move undermines the users it claims to protect, damaging their access to a stable and prosperous DeFi ecosystem. It is hypocritical to claim concern for user safety while attempting to undermine the stability of an ecosystem that so many users rely on."
In addition to discussions about security, the verbal dispute escalated to attacks on various governance forms. Polygon Labs CEO Marc Boiron pointed out that Aave and its surrounding teams are "monopolistic enterprises" and use dirty tactics to instill fear. Boiron stated that Marc Zeller sent him a private message yesterday, "attempting to intimidate" him by saying that Aave DAO would definitely pass the proposal to "exit Polygon." Stani Kulechov responded that Aave DAO was merely initiating discussions and taking action to protect users, stating, "It is inaccurate to label Aave DAO's proposal as anti-competitive behavior, and it shifts people's attention away from the real issue, which is user safety." Stani Kulechov stated, "Aave supports immutable governance. Aave even allows projects to use their own tokens for governance under friendly fork policies. (In contrast), if Polygon wishes to gain more control over cross-chain asset investment strategies, they can completely launch a custom market."
Currently, it seems that the proposals initiated by Allez Labs in collaboration with Morpho and Yearn are unlikely to pass, and whether Aave will actually exit the Polygon ecosystem remains uncertain (note: Lido has announced it will gradually shut down staking services on Polygon). Although this dispute will soon pass, the underlying issues are worth pondering. Without considering whether either side has made false statements, both Aave's risk prevention and Polygon's ecosystem expansion are striving for maximum benefit for themselves and their users. So, in this profit-driven industry, can we only see competition and not coexistence?
