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Decentralized liquidity protocol Aave has deployed on the Ethereum (ETH) Metis layer 2 scaling platform, bringing many decentralized finance (DeFi) features and products to its ecosystem.
The Aave community recently voted on a proposal to deploy a zero-knowledge (zk) protected zkSync EVM, paving the way for the DeFi protocol to take advantage of the powerful performance improvements provided by the scaling infrastructure.
Participants in the Ethereum ecosystem are developing a number of different layer 2 protocols with zk-proof support, giving the wider space the choice of infrastructure to scale their respective platforms.
Although Aave is yet to be deployed on the zkSync Era, it has announced a V3 rollout of its protocol on the Metis Optimistic rollup scaling protocol. The latest version of the Aave protocol is touted to benefit users of both protocols, while users of Metis will benefit from providing DeFi borrowing and lending services.
Ethereum.org highlights the main difference between optimistic rollups and zk rollups. The former processes transactions off the network before publishing the data on the network, with a time frame for network participants to challenge the validity of the transaction data.
At the same time, Zk-rollups performs off-chain transactions and sends large packets on-chain using a single proof of validity, without the need for network validation.
The Metis team has identified a number of ways that users of its ecosystem can benefit from Aave’s deployment. This includes borrowing less-collateralized assets in Aave’s high efficiency mode, improved risk management with supply and borrowing restrictions, and scattered borrowing to reduce exposure to potential market contagion.
Aave’s isolation mode also increases the collateral asset pool, its cross-chain portals provide access to broader DeFi solutions, and its gas optimization also reduces transaction fees.
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Aave is famous in the DeFi space with over $5.5 billion in total value locked in the protocol. Version 3 of the DeFi liquidity protocol was deployed to the Ethereum mainnet in January 2023 following the launch of several Ethereum layer 2 protocols including Avalanche, Arbitrum, Optimism, and Polygon.
1inch Network, another prominent DeFi player, has also chosen zkSync to deploy its aggregation protocols and limit orders, while Uniswap token holders voted to deploy Polygon’s zkEVM solution in April 2023.
