Aave to debut on Linea following fork rival ZeroLend's controversy

12/12/2024 00:32
Aave to debut on Linea following fork rival ZeroLend's controversy

Aave is about to launch its protocol on Linea following a community vote, months after its forked rival faced scrutiny on the same network

Aave is about to launch its protocol on Linea following a community vote, months after its forked rival faced scrutiny on the same network.

The Aave (AAVE) community has given the green light to proposal #5ae27, which suggests deploying the Aave V3 protocol on Linea, a zk-rollup network supported by Consensys. The proposal, first submitted on Nov. 19, saw overwhelming support, with more than 636,000 AAVE tokens cast in favour, signalling a strong push for Aave to broaden its reach in decentralized finance.

Why Linea

Linea is a layer-2 network built on Ethereum, which is powered by a zero-knowledge Ethereum Virtual Machine. Developed by Consensys, Linea aims to fix the common problems with Ethereum, like slow speeds and high fees.

What really sets Linea apart from its competitors, though, is its integration with other Consensys-owned products. For instance, Consensys controls the MetaMask non-custodial crypto wallet and the blockchain infrastructure provider Infura.

With MetaMask’s 30 million active users, this could give Aave a significant opportunity to tap into a much larger user base. However, it remains uncertain whether this expansion will be successful in the long term. As of press time, the Linea network holds nearly $450 million in total value locked, according to data from DefiLlama.

What it means for Aave

With the expansion to Linea, Aave hopes to offer better scalability, faster transactions, and lower costs for its users. Another bonus is the integration of the protocol’s GHO stablecoin with MetaMask’s debit card, which only works on Linea. However, details about this feature are still vague and seem more like a teaser for now.

Aave to debut on Linea following fork rival ZeroLend's controversy - 1
Top protocols by TVL | Source: DefiLlama

It’s worth noting that Aave alone is already one of the largest defi protocols, managing over $21 billion in TVL across 12 blockchains, next only to staking protocol Lido, which boasts over $36 billion in TVL, per data from DefiLlama.

Linea’s zk-rollup technology could potentially play a key role in making Aave’s services more efficient and cost-effective as the protocol also plans to allocate ecosystem incentives, such as stablecoin incentives, to encourage adoption on Linea.

The Shadow of ZeroLend

What’s interesting is that Aave’s expansion to Linea comes just months after its competitor ZeroLend attempted a similar move. ZeroLend, which appears to be fork of Aave, faced criticism and controversy earlier this year. The thing is that critics accused the protocol of being a low-effort fork of Aave, with one governance delegate even calling it “Aave’s codebase with a high inflation token slapped on top.”

The biggest protocol on linea (consensys) is a copy-paste aave-fork that forgot to change hotlinks of documentation which still links to aave docs

ethereum people should shut the fuck up for 30 days and look at the bullshit they're peddling to the world

go keep a clean house pic.twitter.com/MibgMXppuo

— imajin (@majinsayan) July 6, 2024

Moreover, the fork also found itself in hot water when users found out that the mobile version of its website was redirected to Aave’s FAQ section, as reported by Protos. Nonetheless, despite some controversy, ZeroLend still managed to capture over $250 million in TVL on Linea, accounting for over one-third of the network’s total TVL in a moment.

Governance and next steps

The issue with the proposal to deploy Aave V3 on Linea is that it seems to have received a huge backing from one voter only: the Aave Chan Initiative, which is a group that guides governance discussions within the Aave community. It also appears to be the author of the proposal itself. However, it’s yet to be seen how the wider Aave community will eventually respond to the expansion.

Aave to debut on Linea following fork rival ZeroLend's controversy - 2
The voting results for the 5ae27 proposal | Source: Snapshot

According to the proposal’s voting history, nearly 58% of the voting power is concentrated in a single address, which appears to be controlled by the Aave Chan Initiative. Another AaveDAO delegate, under the alias “ezr3al.eth,” contributed 24.3% of the total voting power in support of the proposal.

“By deploying on Linea, Aave can leverage high throughput and fast finality, enabling efficient transaction processing and reduced gas fees,” ACI said in the proposal description. It also emphasized that it “did not receive compensation for creating this proposal.”

The next steps involve working with development teams to implement the deployment on Linea. Risk parameters for wrapped tokens assets like Wrapped Ethereum (WETH), Wrapped Bitcoin (WBTC) and Circle’s stablecoin USD Coin (USDC) have already been established, designed to ensure the protocol’s security and performance on the new network, ACI claims.

AAVE’s price showed minimal reaction to the news, trading at $282.74, reflecting a slight 0.05% decrease in the past 24 hours.

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