Aave DAO Approves Proposal for Ethereum Layer 2 Metis Network Deployment

Aave, a well-known lending protocol, has declared that it will launch version 3 (V3) on the Metis Network, an ecosystem built on top of Ethereum layer 2. A unanimous community vote on the Aave governance forum demonstrating the expansion’s broad support prompted the move, which was implemented in response.

 It is anticipated that the deployment of Aave on Metis would increase market liquidity for both ecosystems and provide Metis users access to Aave’s borrowing and lending services, such as being rewarded for providing token liquidity to the network.

Due to its capacity to provide customers with quicker transactions at reduced rates on the Ethereum network, Metis attracted attention at first during the last bull cycle.

However, networks like Optimism and Arbitrum have already eclipsed it, holding billions of dollars worth of tokens and having healthy ecosystems as opposed to the $40 million on Metis.

Following the rollout of Aave V3, Metis is providing incentives to users in the form of liquidity to promote further usage. To encourage users of the protocol to mine for liquidity over six months, the network intends to give out 100,000 native Metis (METIS) tokens.

Additionally, 4,000 METIS will be given to participating protocols as part of a token mining award program, depending on the number of monthly transactions they produce.

Users of both platforms will benefit from the integration of DeFi borrowing and lending services as a consequence of Aave’s implementation on Metis. For instance, Aave’s high-efficiency option enables customers to borrow assets with minimal security.

Along with segregated borrowing to lessen exposure to possible market contagion, the integration also enhances risk management through supply and borrowing limitations.

While Aave’s cross-chain portals give access to a wider variety of DeFi solutions, its isolation mode increases the pool of collateral assets. The gas optimization function also lowers transaction fees, improving the customer experience even more.

With approximately $5.5 billion in total value locked in the protocol, Aave has established a solid reputation in the DeFi market. In January 2023, Aave V3 was introduced on the Ethereum mainnet. It was then made available on several layer-2 Ethereum protocols, including Avalanche, Arbitrum, Optimism, and Polygon.

 The decision to implement Aave on Metis demonstrates the expanding trend of decentralized banking systems utilizing layer-2 scalability solutions. Participants in the Ethereum ecosystem are creating multiple layer-2 protocols that are zk-proof and provide a range of scalability choices for platforms.

 Several other significant DeFi players have also used layer-2 technologies. While Uniswap token holders voted in favor of deploying on Polygon’s zkEVM roll-up solution in April 2023, The 1inch Network selected zkSync for its aggregation and limit order protocols.

 The business’s choice to grow into Metis Network not only broadens its reach but also highlights the significance of layer-2 scaling solutions in the changing DeFi market.

It becomes more crucial for the continuous development and success of the decentralized financial sector as more platforms embrace these solutions.

I am Vishal. I post articles about the cryptocurrency markets. I'm pursuing a BBA degree. My home is in Navi Mumbai, Maharashtra.I'm constantly interested in new advancements in this industry and I learn something new about it every day. I would love to share such information with you all.

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