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Decentralized liquidity protocol Aave has launched on the Ethereum (ETH) layer-2 scaling solution Metis, introducing a variety of decentralized finance (DeFi) features and products to its ecosystem.
The Aave community recently approved a proposal to deploy on the zero-knowledge (zk) proof EVM zkSync, enabling the DeFi protocol to leverage significant performance enhancements provided by the scaling infrastructure.
Several zk-proof-based layer-2 protocols are currently being developed by participants in the Ethereum ecosystem, offering the broader space a selection of infrastructure options to scale their respective platforms.
Although Aave has not yet launched on zkSync Era, it has confirmed its deployment of V3 of its protocol on the Optimistic rollup scaling solution Metis. The latest iteration of Aave’s protocol is expected to benefit users across both platforms, with Metis users poised to gain from the availability of DeFi borrowing and lending services.
Ethereum.org outlines the primary distinction between optimistic rollups and zk-rollups. The former processes transactions off-chain before recording data on-chain, allowing a time period for network participants to contest the validity of transaction data.
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In contrast, zk-rollups execute transactions off-chain and submit large batches on-chain using a single proof of validity, eliminating the need for the network to verify the data.
The Metis team emphasized several advantages for users within its ecosystem resulting from Aave’s deployment. These include the ability to borrow assets with reduced collateral through Aave High-Efficiency mode, enhanced risk management with supply and borrow caps, as well as siloed borrowing to minimize exposure to potential market contagion.
Aave’s Isolation mode also expands the range of collateral assets, its Cross-Chain Portals offer access to broader DeFi solutions, and its Gas Optimization feature helps lower transaction fees.
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Aave is well-known in the DeFi sector, with over $5.5 billion in total value locked within the protocol. V3 of the DeFi liquidity protocol was launched on Ethereum’s mainnet in January 2023, following its introduction on several Ethereum layer-2 protocols, including Avalanche, Arbitrum, Optimism, and Polygon.
1inch Network, another significant player in DeFi, has also chosen zkSync for the deployment of its aggregation and limit order protocols, while Uniswap token holders voted in favor of launching on Polygon’s zkEVM roll-up solution in April 2023.
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