Aave exploring Solana and Layer 2 expansion
Aave, the decentralised lending protocol, is looking at opprtunities for cross chain lending and also looking to expand into other markets and chains beyond Ethereum and Polygon.
In a further example of how inter-chain operability would be the key aspect for development teams in the future, Aave founder Stani Kulechev has confirmed that the company is looking at a multichain strategy. Aave is currently the largest decentralized lending platform with over $20 billion in assets that are basically locked within Ethereum and Polygon. But the team does not want to load all its eggs into a single basket or in this case, into 2 baskets.
That’s why Kulechev has expressed his willingness to look into Solana for possible expansion in the future with the EVM solution that has been built by Neon Labs. The company is also looking at Avalanche, Arbitrum, and Optimism as other possible networks where it can expand. In this, the key would be the interoperability with Ethereum as all the funds are currently locked within it and so only a chain that is inter-operable with Ethereum through a Virtual Machine would be able to ensure the movement of assets across the networks seamlessly.
For Aave, being able to establish across various networks offers very interesting possibilities as it would get access to liquidity and users across various chains and it would be a win-win for the users as well as they would be able to move their collateral across networks or keep their collateral in one network and borrow from the other and a whole lot of combinations would then become possible and existing as well.
For the various chains under consideration, it would be more transactions, more liquidity, and hence more fees as well and that is why Aave is likely to be welcomed into the fold by any chain. Its move into Polygon was a big success with the induction of a large amount of liquidity into Polygon but its proposed move to Solana is likely to be a slightly bigger challenge as it is a very different network from Ethereum. But Solana does have the tools and a strong community to make the move possible and it would be interesting to see the uptake from the Solana and Aave users once the expansion into Solana is complete.