The Dispute Between Polygon and Aave: Only Competition, No Symbiosis?

Author: Yangz, Techub News

Recently, Marc Zeller, founder of the Aave Chan Initiative (ACI), initiated a community proposal suggesting adjustments to the risk parameters for Aave V2 and V3 on Polygon, explicitly stating to "encourage migration from Polygon." As the application with the highest TVL on Polygon ( DeFillama data shows that at the time of writing, the total TVL on Polygon is approximately $1.21 billion, with about $450 million provided by Aave), this move by Aave immediately drew industry attention and sparked a verbal dispute between the Polygon team and the Aave team.

Polygon co-founder Sandeep Nailwal accused Aave's leadership of "sour grapes," stating that "this behavior is extremely monopolistic and anti-competitive, and does not align with the spirit of Web3." In response, Aave founder Stani Kulechov claimed that Polygon's actions were actually "the villain crying out first," quickly spreading rumors and "shifting blame" to Aave's leadership in the face of widespread user opposition.

So, what is the root of this sudden quarrel? The reason lies in a Pre-PIP improvement proposal released by the Polygon community.

On December 12, Allez Labs, in collaboration with DeFi protocols Morpho and Yearn, drafted this proposal . The proposal states that there are approximately $1.3 billion in stablecoin reserves (DAI, USDC, and USDT) idling on the Polygon PoS cross-chain bridge, which, based on current benchmark lending rates, translates to about $70 million in annual yield being wasted. Therefore, the three parties proposed to deploy these stablecoin reserves into various yield strategies within lending protocols and initiate new ecological incentive programs to expand the DeFi ecosystem of Polygon PoS and AggLayer.

Specifically, the proposal suggests converting DAI into Maker's sUSDS and depositing USDC and USDT into Morpho Vaults to earn yields. Additionally, Allez Labs will act as a risk manager to conduct risk analysis on other potential Morpho Vaults. Yearn will serve as the manager of the ecological incentive program, creating a Polygon ecological Yearn Vault for each approved asset and using the yields obtained from the Morpho market and sUSDS strategy to reward the depositors of these Vaults.

At first glance, this proposal seems unproblematic. However, Aave's leadership perceives "huge risks" hidden beneath it. On the surface, as reflected in various examples cited by Marc Zeller regarding historical cross-chain bridge vulnerabilities causing losses to the DeFi ecosystem, this proposal poses a financial security risk to Aave. Furthermore, as everyone can see, the initiators of this proposal are the three main beneficiaries of it. As the top-ranked application in terms of TVL within the Polygon ecosystem, Aave may feel a sense of "being overlooked" or "betrayed."

Moreover, Stani Kulechov pointed out in his response here that this proposal is actually the result of a "secret deal" between Polygon and the aforementioned three parties, with reports indicating that Polygon completed a massive token transaction as a result. Stani Kulechov stated that Polygon users expressed dissatisfaction with the proposal from the very beginning, and that Polygon's leadership only pretended today to claim they do not support the proposal, merely "making excuses." To protect user asset security, Aave DAO proposed to "exit Polygon."

However, this proposal aimed at "protecting user safety" is viewed by Polygon as "sour grapes." Polygon co-founder Sandeep Nailwal responded here , stating that when this pre-proposal was first submitted for discussion, Aave's leadership actively lobbied to ensure that cross-chain funds would be deployed in Aave. During the public solicitation of proposals on the Polygon governance portal, Aave's leadership held multiple meetings and invited Polygon Labs leadership to various dinners and presentations to gain their support and "choose Aave" as a stakeholder in the cross-chain process. Additionally, Aave also released related proposals, but they did not garner widespread discussion within the Polygon community. In contrast, the proposal from Morpho (Aave's main competitor) received more support from community members.

Nailwal stated that Aave "ignores the established safety measures, more like 'sour grapes.' Ironically, this move would harm the users it claims to protect, undermining their access to a stable and prosperous DeFi ecosystem. It is hypocritical to claim concern for user safety while attempting to undermine the stability of the ecosystem that so many users rely on."

In addition to discussions about security, the quarrel between the two parties has escalated to attacks on various governance forms. Polygon Labs CEO Marc Boiron pointed out that Aave and its surrounding teams are "monopolistic enterprises" that use dirty tactics to instill fear. Boiron stated that Marc Zeller sent him a private message yesterday, "trying to intimidate" him by saying that Aave DAO would definitely pass the proposal to "exit Polygon." Stani Kulechov, on the other hand, stated that Aave DAO is merely initiating discussions and taking action to protect users, and that characterizing Aave DAO's proposal as anti-competitive is inaccurate and diverts attention from the real issue, which is user safety. Stani Kulechov remarked, "Aave supports immutable governance. Aave even allows the use of project tokens for governance under a friendly fork policy. (In contrast) if Polygon wishes to gain more control over cross-chain asset investment strategies, they can completely launch a tailored market."

Currently, it seems unlikely that the proposal initiated by Allez Labs, Morpho, and Yearn will pass, and whether Aave will truly exit the Polygon ecosystem remains uncertain (*Note: * Lido has announced it will gradually shut down its staking services on Polygon ). Although this dispute will soon pass, the underlying issues are worth pondering. Without considering whether either party has made false statements, both Aave's risk prevention and Polygon's ecological expansion are aimed at maximizing benefits for themselves and their users. So, in this profit-driven industry, can we only see competition and not coexistence?