The leading DeFi lending protocol Aave may soon exit the Polygon blockchain following heated disputes over a controversial $1 billion investment proposal, threatening a major disruption to Polygon's DeFi ecosystem.
Two influential Aave delegates have indicated they will vote to withdraw from Polygon when the proposal comes up for consideration next month. The delegates - longtime Aave contributor Marc Zeller and a user known as EzR3aL - collectively control enough voting power to determine the outcome based on recent voting patterns.
The conflict erupted after risk management firm Allez Labs proposed moving $1.3 billion in stablecoins from Polygon's bridge to Morpho, a rising DeFi protocol, where the funds could generate an estimated $70 million in annual revenue. The proposal aimed to put idle bridge assets to productive use.
However, Zeller's Aave Chan Initiative strongly opposed the move, citing security concerns around bridge risks, and suggested Aave should completely withdraw from Polygon "to mitigate risk." The counter-proposal sparked accusations of anti-competitive behavior from Polygon's leadership.
"This is a prominent example of a DAO leadership engaging in anti-competitive tactics and bullying other ecosystems," said Polygon co-founder Sandeep Nailwal.
Aave founder Stani Kulechov defended the position, stating: "Framing Aave DAO's proposal as anti-competitive behavior is inaccurate and diverts attention from the real issue: user security."
The potential departure of Aave would deal a serious blow to Polygon, as Aave currently represents about 40% of all crypto locked in Polygon's DeFi protocols. However, Polygon only accounts for 1.5% of Aave's revenue.
Polygon Labs CEO Marc Boiron expressed disappointment but remained optimistic: "A world in which Aave leaves is not one that I want...But would it be harmful? I think it ends up depending on what teams decide to come fill the gap."
The preliminary vote on Aave's potential exit from Polygon is expected to take place next month, marking a critical moment for both protocols' futures.