Exploring New Frontiers with Aave
During the summer of 2020, DeFi matured, developed, and defined its product-market fit. Now, it’s time for the Aave Protocol to enter the scalability phase and bring decentralised finance back into everyone’s hands, even those with 3 figure portfolios.
Focus on Ethereum
Aave was born and raised on Ethereum L1, and the Ethereum community was a huge catalyst for the development of the protocol and growth of the Aave Community. Ethereum and the EVM is the center of gravity for DeFi, and no other network comes close to Ethereum’s network effect. However, on a public blockchain, having a slot on a block is defined by supply and demand.
Block space supply today is scarce and limited, and since the “DeFi Summer” of 2020, demand for using Ethereum and DeFi has never slowed down.
High transaction fees are a feature of a successful public blockchain, as they define actors ready to pay the market price to use the decentralised services.
That being said, DeFi was always intended to create a sustainable and more inclusive alternative to traditional finance. If DeFi is great but only limited to certain high networth users, DeFi will fall short of its mission to be finance for everyone.
Multi-Market Approach, ETH L1 as a Settlement layer
The solution is on the side of scalability layers of Ethereum:
Sidechains, rollups, and zero-knowledge-based solutions are quite complex, but fortunately for us, the role of engineers is to make great technology well implemented and intuitive so that complex stuff becomes invisible to untrained eyes just like the Aave mascot.
The Aave Protocol has a multi-market approach and will implement it to scalability solutions in a “New Frontiers” exploration. One of the main assets of DeFi is the ability to build synergies with other projects, and by having an Aave Market in all the venues that matter, there’s no need for a “winner-takes-all” scalability solution and users can choose the solution they feel comfortable with.
The freedom of choice is earned by a technological victory. In all sidechains that matter, the EVM from Ethereum is the standard of doing smart-contract applications. Replication and deployment of Ethereum L1 code is mostly a seamless process.
The First Wave: Sidechains with Polygon
The first implementation of the exploration of New Frontiers will be with Polygon (formerly known as MATIC). This scalable sidechain of Ethereum allows fast and nearly-free transactions, and Polygon has a nascent ecosystem of applications such as community favourite Aavegotchi and decentralised exchange Quickswap.
Polygon is also a network powered by Chainlink, allowing the Aave Protocol to maintain the highest standard of safety for the protocol price feeds.
New frontiers are also an opportunity to taste the local delicacies!
If the deployment market starts with a limited set of collaterals, being in Polygon is the opportunity for the Aave community to onboard new kinds of collaterals that would be a natural fit in these Networks.
The Aave Market on Polygon is an opportunity to welcome the MATIC asset as collateral, for example.
At launch the following assets will be onboarded on the Polygon Aave Market :
- MATIC
- USDC
- USDT
- DAI
- WETH
- AAVE
- WBTC
To make the experience seamless for the pioneers willing to explore this new frontier with us, a smart-contract bridge will soon be available to bring your favourite assets to Polygon. Users of the bridge will receive part of the transaction fee used in MATIC tokens to cover most of their transaction fees on the Polygon blockchain.
Meanwhile, the Polygon Bridge is available to transfer assets from Ethereum to Polygon
Thanks to the integration of EIP-3085, switching from Ethereum to the Polygon network is as easy as one-click for every Metamask user, just add the Polygon network when your Metamask Pop-up appears and confirm.
if you’re not using Metamask, please refers to the official Polygon network documentation to set-up your network RPC
While depositing into Aave on Polygon, you might see a “0.00$” gas fee reference in Metamask.
It’s because Metamask User interface doesn’t show transactions that cost below 0.01$ and Polygon is multiple times cheaper to use than this threshold.
Here’s an indicative cost of Aave Protocol interactions, please note that these costs might change in the future with potential network congestion and MATIC asset valuation.
- Deposit AAVE : $0.000061
- Borrow USDC : $0.000102
- Withdraw AAVE : $0.000109
- Repay USDC : $0.000072
Aave has also integrated with Transak to enable the direct purchase of Polygon assets with fiat currencies.
