Behind the spat between Polygon and Aave: only competition, no symbiosis?

Author: Yangz, Techub News

Recently, Marc Zeller, founder of the Aave Chan Initiative (ACI), launched a community proposal to adjust the risk parameters of Aave V2 and V3 on Polygon, and explicitly "encourage migration from Polygon." As the application with the highest TVL on Polygon ( DeFillama data shows that at the time of writing, Polygon’s total TVL is approximately US$1.21 billion, of which approximately US$450 million is provided by Aave), Aave’s move immediately attracted industry attention and also broke out between the Polygon team and Aave A verbal spat between teams.

Polygon co-founder Sandeep Nailwal accused Aave's leadership of "sour grapes", saying "this behavior is extremely monopolistic and anti-competitive and inconsistent with the spirit of Web3." Aave founder Stani Kulechov responded He said that Polygon's behavior was actually "the evil one complained first." In the face of widespread user opposition, it quickly spread rumors and "passed the blame" to Aave's leadership.

So, what is the source of this sudden spat? The reason is that it all stems from a Pre-PIP improvement proposal released by the Polygon community.

On December 12, Allez Labs collaborated with DeFi protocols Morpho and Yearn to draft the proposal . The proposal states that there are currently approximately US$1.3 billion in stable currency reserves (DAI, USDC and USDT) on the Polygon PoS cross-chain bridge that are idle. Calculated at the current benchmark lending rate, this is equivalent to an annual income of approximately US$70 million. is wasted. Therefore, the three propose to deploy these stablecoin reserves into lending protocols with various yield strategies and launch new ecological incentive plans to expand the DeFi ecosystem of Polygon PoS and AggLayer.

Specifically, the proposal proposes exchanging DAI for Maker’s sUSDS and depositing USDC and USDT into Morpho Vaults to earn income. In addition, Allez Labs will act as risk manager to conduct risk analysis for other possible subsequent Morpho Vaults. Yearn will serve as the administrator of the ecological incentive plan, creating a Polygon ecological Yearn Vault for each approved asset, and using the proceeds from the Morpho market and sUSDS strategy to reward depositors of these Vaults.

At first glance, there seems to be nothing wrong with this proposal. But in the view of Aave leadership, there are "huge risks" hidden under the proposal. On the surface, as reflected in the various examples cited by Marc Zeller of historical cross-chain bridge vulnerabilities causing losses to the DeFi ecosystem, this proposal poses a financial security risk to Aave. Secondly, as you can see, the sponsor of this proposal is the three main beneficiaries of this proposal. As the No. 1 TVL-ranked application in the Polygon ecosystem, Aave may feel "neglected" or "betrayed."

In addition, Stani Kulechov pointed out in his response that this proposal is actually the result of a "secret communication" between Polygon and the above-mentioned three parties, and it is reported that Polygon completed a huge token transaction as a result. Stani Kulechov said that Polygon users have expressed dissatisfaction with the proposal from the beginning, and Polygon leadership "hypocritically" said today that it did not support the proposal and was just "making up excuses." In order to protect the security of user assets, Aave DAO proposed the proposal to "exit Polygon".

However, in the eyes of Polygon, this proposal for "protecting user safety" is "sour grapes". In response to this matter, Polygon co-founder Sandeep Nailwal said that when this plan was first submitted for discussion, Aave leadership lobbied hard to ensure that cross-chain funds were used for deployment on Aave. During the public call for proposals on the Polygon governance portal, Aave leadership also held multiple meetings and invited Polygon Labs leadership to various dinners and presentations to gain Polygon Labs’ support and “choose Aave.” "As a stakeholder in the cross-chain process. In addition, Aave also released relevant proposals, but it did not trigger widespread discussion in the Polygon community. In contrast, Morpho’s (Aave’s main competitor) proposal received support from more community members.

Nailwal said that Aave "disregards the security measures that are in place and is more like sour grapes." Ironically, this move will harm the users it claims to protect and undermine their confidence in a stable and prosperous DeFi Access to the ecosystem. It is hypocritical to claim to care about user safety while trying to destabilize the ecosystem that so many users rely on.”

In addition to discussions about security, the two sides' spat also escalated into attacks on their respective forms of governance. Polygon Labs CEO Marc Boiron pointed out that Aave and its surrounding teams are "monopolies" and use dirty methods to create fear. Boiron said that Marc Zeller sent him a private message yesterday, "trying to intimidate" him by saying that Aave DAO would definitely pass the "exit Polygon" proposal. Stani Kulechov said that Aave DAO only initiates discussions and takes actions to protect users. "It is inaccurate to characterize Aave DAO's proposals as anti-competitive behavior and diverts people's attention from the real issue, which is user security." Stani Kulechov said, "Aave supports immutable governance. Aave even allows the use of the project's own tokens for governance under a friendly fork policy. (On the contrary) If Polygon If they want to have more control over their cross-chain asset investment strategies, they can launch a tailor-made market.”

At present, it seems that the proposal initiated by Allez Labs, Morpho and Yearn will most likely not pass, and it is unknown whether Aave will actually withdraw from the Polygon ecosystem ( note, Lido has announced that it will gradually shut down the staking service on Polygon ). Although this dispute will soon pass, the issues behind it are worth pondering. Regardless of whether there are false statements by both parties, from Aave's risk prevention to Polygon's ecological expansion, both parties are striving for the best interests for themselves and users. So, in this profit-first industry, can we only see competition but not symbiosis?