Aave DAO Votes for Fresh Deployment on Ethereum

DeFi Lender Embraces Proposal to Integrate its V3 on No. 1 Smart Chain Network

By: Tarang Khaitan Loading...

Aave DAO Votes for Fresh Deployment on Ethereum

Aave DAO members overwhelmingly passed a vote on Tuesday to deploy the protocol’s latest iteration on the Ethereum blockchain.

The move paves the way for a new deployment of one of the most popular protocols in decentralized finance. Aave, which has $4.2B in TVL, pioneered DeFi lending and has been working to connect with traditional finance through its Aave Arc venture.

Growth Strategy

Less than 1% of the votes cast opted to upgrade the existing V2 smart contract instead of making a fresh deployment. Aave founder Stani Kulechov favored the deployment oin Ethereum as a way to consume less resources and support a GHO growth strategy.

The proposal was introduced by Bored Ghosts Developing Labs (BGD Labs), a trio of prominent Aave community members who banded together to develop the Aave ecosystem in March.

According to a report released by BGD Labs, there are several key benefits of issuing a fresh deployment: itcan be released quickly; would not require any new security audits; and would be affordable because gas fees would fall.

Still, the downside of a fresh deployment is that users will have to migrate their Aave V2 positions to Aave V3, and some integrations might be tough.

Moreover, liquidity may be fragmented across different iterations of the protocol. Aave V2 has the lion’s share of the total TVL across all iterations of the protocol.


Yet BGD Labs concluded a fresh deployment would be better suited for rolling out Aave V3 on the Ethereum blockchain. On Mar.17, Aave launched V3 on six blockchains, including Layer 1s Fantom, Avalanche, and Harmony, and three Layer 2s: Arbitrum, Optimism, and Polygon.

Avalanche and Optimism have the most TVL in Aave V3 at $1B. This is due to the liquidity mining incentives being handed out by both chains. In April, Avalanche announced their incentive program. Meanwhile, on Aug.8, Optimism announced their incentivized liquidity mining which will span 90 days.

In September, Aave DAO passed a proposal to retroactively pay its developers who worked on Aave V3, a sum of $15M.