Aave Addresses Transaction Fees
Block space supply today is scarce and limited, leading to the massive expansion of assets on the Ethereum blockchain. Since the “DeFi Summer” of 2020, demand for using Ethereum and DeFi has never slowed down, with more than $43 billion of total value locked within the industry’s leading platforms.
While the future of DeFi looks bright, the demand for Ethereum and DeFi led to high transaction fees. These issues have increased congestion and gas prices, which have affected the projects it initially helped succeed.
Aave acknowledges high fees are a feature of “a successful public blockchain” since they indicate users are willing to pay the price in exchange for services, but alternative solutions are required.
Layer 2 Proof-of-Stake Sidechain
The DeFi lending protocol will port its platform to Polygon, a layer 2 proof-of-stake sidechain — previously referred to as Matic Network — to address the high transaction fees on Ethereum. The sidechain enables users to send back and forth tokens via a bridge protocol, thereby offering lower transaction costs than Ethereum itself provides.
The mechanism on Ethereum will enable tokens from the layer 1 mainchain to be utilized in another blockchain. Still, it can be moved back to the original chain if required.
Aave says that immediately after its platform is available on Polygon, native assets (MATIC) will be added to the collateral list. MATIC, USDC, USDT, WETH, DAI, AAVE, and WBTC are the assets used as collateral on Polygon-based Aave markets at launch.
Aave also noted that it would use a smart-contract bridge to seamlessly port assets from one network to another, soon available. They will have a superior standard of safety for the protocol price feeds since Polygon is a network powered by Chainlink.
The Aave protocol intends to proceed in putting up synergies with exterior projects to have an Aave Market in all venues that matter. The blockchain firm believes there is no need for a “winner-takes-all” scalability solution, allowing for better freedom of choice for users.
Aave’s integration with Polygon will ensure users enjoy faster transactions, more scalability, and lower gas prices, further boosting the platform to superior levels as the crypto market continues to advance.
The step is the “first wave” in Aave Protocol’s “New Frontiers” analysis mission, aiming to allow it to build synergies with other projects and further expand to a multi-market approach to secure future protocol advancement.
Layer 2 is one of the clear trends in the crypto community in 2021. Some other popular Layer 2 solutions at present include Optimism, ZK Sync, Arbitrum, and Starkex.
Published at Thu, 01 Apr 2021 17:00:28 +0000