Aave Officially Withdraws, Marking a Shock for Polygon PoS
🔹 $AAVE – the leading liquidity protocol on Polygon PoS – has decided to withdraw from this network after Aave DAO approved the proposal to stop supporting stablecoin lending.
🔹 More than 300 million USD in total value locked (TVL) on Polygon PoS could disappear, striking a heavy blow to the liquidity of this ecosystem.
📢 With the decision to set the loan-to-value (LTV) ratio of USDT and USDC to 0%, users will no longer be able to borrow stablecoins on Aave at Polygon PoS.
Reasons for Aave's Withdrawal
📌 The main reason stems from a controversial proposal from Polygon in December 2024.
🌉 #Polygon once proposed deploying over 1 billion USD of idle stablecoins on the PoS Chain bridge to seek profits on platforms like Morpho and Yearn – direct competitors of Aave.
⚠ The Aave community is concerned that this is a high-risk strategy, especially in the context of many hacks related to cross-chain bridges that have occurred before, such as Multichain and Harmony Bridge.
⏳ In response to the situation, Marc Zeller – the founder of Aave – proposed to adjust the LTV to 0% for stablecoins, completely stopping the ability to borrow on Polygon PoS.
Aave DAO Officially Approves the Proposal
📅 On February 25, Aave DAO held a vote with a result of 692,000 votes in favor and 117,000 votes against, officially approving the cessation of stablecoin lending support on Polygon PoS.
⚖ Aave Labs founder, Stani Kulechov, asserts that this decision is to ensure user safety and maintain risk management in the DeFi ecosystem.
📉 Immediate impact: Users withdrawing assets from Aave on Polygon PoS could sharply decrease TVL, almost equivalent to Aave completely leaving this network.
Reaction from Polygon Labs
💬 Marc Boiron – CEO of Polygon Labs – hoped Aave would reconsider this decision.
📢 He argued that the Polygon community had actually voted against the plan to deploy assets on Morpho and Yearn, and affirmed that this proposal was never officially implemented.
🤝 Nevertheless, Boiron acknowledges that the final decision still depends on the reaction of the Aave community. If #PolygonPos is an important source of revenue, Aave may look to maintain cooperation in the future.
Impact on the Polygon Ecosystem
🚨 Aave is the largest DeFi application by TVL on Polygon PoS, so the withdrawal could:
❌ Causing severe liquidity depletion on Polygon
❌ Reducing capital inflow into the ecosystem
❌ Creating instability for other DeFi platforms operating on Polygon
📌 On the same day, Aave announced that it had deployed the latest upgrade, focusing on managing bad debts and liquidations, while paving the way for the Umbrella initiative.
⏳ With Aave's firm decision, the Polygon ecosystem will face significant impacts in the near future. Can Polygon recover from this shock? Let's follow the next developments! 🚀 #anhbacong