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Aave is Exploring Solana, Avalanche, Layer 2 Expansion

Aave looks to be taking a multi-chain approach for its lending markets.

Aave is Exploring Solana, Avalanche, Layer 2 Expansion
Shutterstock cover by DIAMOND VISUALS

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Aave founder Stani Kulechov revealed that the protocol was looking into expanding its markets beyond Ethereum and Polygon.

Aave to Enable Cross-Chain Collateral

Decentralized lending protocol Aave is working on a multi-chain strategy.

Speaking at Chainlink’s Smart Contract Summit, Aave’s founder and CEO Stani Kulechov said the team was considering launching on several new networks.

In a web presentation, Kulechov announced the possible expansion of Aave’s lending and borrowing markets on Solana via the EVM-compatible solution Neon Labs, Avalanche, and the Optimistic Rollup solutions Arbitrum and Optimism under its multi-chain strategy.

Aave is currently the largest decentralized lending platform with $21.5 billion in total value locked across its markets on Ethereum and Polygon.

Kulechov clarified that that compatibility with the Ethereum Virtual Machine was an important factor for the protocol to consider expansion and that it had influenced its selection process for other networks to explore.

While originally founded on Ethereum, in March 2021 the team launched its lending markets on Polygon. That expansion was a great success. Just in a span of four months, Aave’s Polygon market hosts about $4 billion in total funds.

Aave also launched an automated market maker liquidity pool in March; it hinted at “new frontiers” beyond Ethereum at the time.

Now, it seems like the protocol is preparing to launch on several networks. The expansion is expected to proceed gradually over time and in multiple phases. Kulechov also confirmed that the project is working on building a framework for cross-chain governance.

Going multi-chain will enable the protocol to achieve cross-chain composability, meaning users will be able to move collateral from one chain to another, or keep the collateral on one chain and borrow on another chain.

In recent months, Aave has hinted at various strategic moves to maintain its lead in the DeFi space. Besides the multi-chain move, Kulechov has revealed the team’s plans to build a decentralized “Twitter on Ethereum” and the launch of private pools targeted at institutions via its Aave Pro offering.

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