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Aave plans to leave six blockchain networks after each generated less than $5,000 in quarterly protocol revenue.
Aave, DeFi’s largest lending protocol, is preparing to wind down six smaller blockchain deployments and retire dozens of underused markets after a review found that keeping them alive cost more than they earned.
The plan covers Sonic, Scroll, zkSync, Metis, Soneium and Aptos, according to a governance proposal published Wednesday by LlamaRisk, a risk adviser partly funded by the Aave DAO. The risk adviser said:
“On six smaller deployments the assessment applies to the whole market rather than individual reserves: aggregate activity has declined to a level where the revenue the deployment generates does not cover the cost of supporting it, so the entire market is wound down at once.”
It remains a proposal rather than a completed shutdown, although Aave founder Stani Kulechov presented the changes as already underway, citing “low adoption.”
The wider cleanup also covers 21 matured Pendle Principal Tokens, fixed-term crypto products that have already reached their expiry dates. Together, the markets contain $98.1 million in supplied assets and $15.6 million in outstanding debt.
Read also: AAVE Price Could More Than Double Within a Year, Grayscale Says
Six Chains No Longer Pay for Themselves
The business case for keeping those markets alive has faded fast. Deposits fell 74% on Sonic, 86% on Scroll, 88% on zkSync, 79% on Metis and 95% on Soneium over six months, while available liquidity on Aptos dropped 94%, according to the proposal.
Each of the six deployments now generates less than $5,000 per quarter. Metis, Soneium and Aptos bring in less than $1,000 each, nowhere near enough to cover the cost of maintaining their price feeds, monitoring systems and other operations.
But Aave isn’t going to kill off these markets abruptly. Open positions will be kept, but these markets will be frozen to prevent any new deposits, borrowing and collateral. Also, supply and borrowing caps will be lowered to just one token.
Then, Aave will allocate 99% of the interest payments of the borrowers into its treasury. Furthermore, a 5% base borrowing rate will be introduced. The suppliers will earn less while the borrowers will be paying more. Eventually, both groups will exit these markets without Aave having to force them to.
Source: <a href="https://bitcoinfoundation.org/news/defi/aave-to-deprecate-50-low-adoption-assets-wind-down-six-chains/” target=”_blank” rel=”nofollow noopener”>bitcoinfoundation.org