Aave to debut on Linea following fork rival ZeroLend’s controversy

Aave is about to launch its protocol on Linea following a community vote, months after its forked rival faced scrutiny on the same network.

The Aave (AAVE) community has greenlit proposal 5ae27, which proposes to distribute the Aave V3 protocol on Linea, a zk-rollup network powered by Consensys. First introduced on November 19, the offering received overwhelming support, with more than 636,000 AAVE tokens accepted, signaling a strong push to expand Aave’s reach in decentralized finance.

Why Linea?

Linea is a layer-2 network built on Ethereum, powered by a zero-knowledge Ethereum Virtual Machine. Developed by Consensys, Linea aims to solve common problems of Ethereum such as slow speeds and high fees.

What really sets Linea apart from its competitors is its integration with other products from Consensys. For example, Consensys controls the MetaMask non-custodial crypto wallet and blockchain infrastructure provider Infura.

With MetaMask’s 30 million active users, this could give Aave a significant opportunity to tap into a much larger user base. However, it remains unclear whether this expansion will be successful in the long term. According to DefiLlama’s data, the total value of the Linea network is approximately $450 million as of press time.

What does it mean for Aave?

With the expansion of Linea, Aave hopes to offer its users better scalability, faster transactions and lower costs. Another advantage is the integration of the protocol’s GHO stablecoin with MetaMask’s debit card, which works only on Linea. However, details about this feature are still vague and it seems to be more of a teaser for now.

TVL’s best protocols | Source: DefiLlama

It is worth noting that Aave alone is already one of the largest defi protocols, managing over $21 billion in TVL across 12 blockchains, alongside staking protocol Lido, which has over $36 billion in TVL according to data from DefiLlama .

Linea’s zk-rollup technology could potentially play a significant role in making Aave’s services more efficient and cost-effective as the protocol also plans to allocate ecosystem incentives, such as stablecoin incentives, to encourage Linea adoption.

Shadow of ZeroLend

What’s interesting is that Aave’s expansion into Linea comes just months after its rival ZeroLend made a similar attempt. ZeroLend, which appears to be a fork of Aave, faced criticism and controversy earlier this year. The thing is, critics have accused the protocol of being a low-effort fork of Aave, with one administration delegate even calling it “Aave’s codebase with a hyperinflation token.”

The biggest protocol in Linea (consensys) is a copy-paste aave-fork that still forgets to replace the documentation links that link to the aave docs.

Ethereum guys need to shut up for 30 days and look at the bullshit they’re selling to the world

go keep the house clean pic.twitter.com/MibgMXppuo

— imagin (@majinsayan) July 6, 2024

Moreover, as reported by Protos, the fork also found itself in trouble when users learned that the mobile version of the website was redirected to Aave’s FAQ section. However, despite some controversy, ZeroLend managed to achieve over $250 million in TVL on Linea; which suddenly accounts for more than a third of the network’s total TVL.

Governance and next steps

The problem with the proposal to deploy Aave V3 on Linea is that it appears to have overwhelming support from only one constituency: the Aave Chan Initiative, a group that guides governance discussions within the Aave community. He also appears to be the author of the quote. However, it remains to be seen how the broader Aave community will react to the expansion.

Voting results for proposal 5ae27 | Source: Snapshot

According to the proposal’s voting history, approximately 58% of the voting power is concentrated in a single address that appears to be controlled by the Aave Chan Initiative. Another AaveDAO delegate under the pseudonym “ezr3al.eth” contributed 24.3% of the total voting power in support of the proposal.

“By deploying on Linea, Aave can benefit from high throughput and fast settlement, resulting in efficient transaction processing and low gas fees,” ACI said in its offering statement. He also emphasized that he “did not receive compensation for preparing this proposal.”

Next steps include working with development teams to implement the distribution in Linea. ACI claims that risk parameters for wrapped token assets such as Wrapped Ethereum (WETH), Wrapped Bitcoin (WBTC), and Circle’s stablecoin USD Coin (USDC) have already been established and are designed to ensure the security and performance of the protocol on the new network.

AAVE’s price showed little reaction to the news, trading at $282.74, reflecting a slight decline of 0.05% in the last 24 hours.