Aave, a decentralized liquidity protocol, has recently deployed on the Ethereum layer-2 scaling platform called Metis, bringing a host of decentralized finance (DeFi) features and products to its ecosystem. The latest deployment of Aave’s protocol, version 3, is set to benefit users across both protocols, with Metis users gaining access to DeFi borrowing and lending services.
A number of different zero-knowledge (zk)-proof-powered layer-2 protocols are being developed by Ethereum ecosystem participants, providing the wider space with a choice of infrastructure to scale their respective platforms. While Aave has yet to deploy on zk-Sync Era, its recent deployment on Optimistic rollup scaling protocol Metis is a significant step towards tapping into performance improvements delivered by the scaling infrastructure.
Ethereum.org highlights the main difference between optimistic rollups and zk-rollups. The former processes transactions off-chain before publishing data on-chain, with a time frame for network participants to challenge the validity of transaction data. Zk-rollups, on the other hand, execute transactions off-chain and submit large batches on-chain using a single proof of validity, with no need for the network to validate the data.
The team from Metis highlighted a number of advantages of Aave’s deployment for its users. This includes borrowing assets with less collateral with Aave High-Efficiency mode, improved risk management with supply and borrow caps, as well as siloed borrowing to reduce exposure to potential market contagion. Additionally, Aave’s Isolation mode increases the pool of collateral assets, its Cross-Chain Portals provide access to wider DeFi solutions, and its Gas Optimization reduces transaction fees.
Aave is a renowned protocol in the DeFi space, with over $5.5 billion in total value locked. V3 of the DeFi liquidity protocol was deployed on Ethereum’s mainnet in January 2023, following its launch on a number of Ethereum layer-2 protocols, including Avalanche, Arbitrum, Optimism, and Polygon.
1inch Network, another prominent DeFi player, also opted for zkSync to deploy its aggregation and limit order protocols, while Uniswap token holders voted in favor of deploying on Polygon’s zkEVM roll-up solution in April 2023.
The recent deployment of Aave’s V3 on Metis is expected to bring about greater access and affordability to DeFi services within the Ethereum ecosystem. Moreover, the recent push towards combining decentralization and scalability in the Ethereum network highlights the growing importance of collaboration between various DeFi projects to achieve greater growth and adoption.
In conclusion, the deployment of Aave’s V3 protocol on Metis is a significant development that will further drive the adoption of DeFi services in the Ethereum ecosystem. With the deployment, users of both platforms now have access to more DeFi borrowing and lending services, heightened risk management features, and reduced transaction fees. As the DeFi space continues to evolve, it is expected that more projects will adopt similar strategies, ensuring greater decentralization and scalability within the Ethereum network.