On Tuesday, Marc Zeller, integration lead at decentralized finance (DeFi) borrowing and lending protocol Aave, proposed to freeze the platform’s v3 Fantom market. Created in 2018, Fantom is a directed acrylic graph smart contract platform that provides DeFi services and on which Aave is currently bridged.
Zeller explained the rationale for removing the Fantom bridge:
“After the Harmony bridge event and the recent Nomad bridge exploit, the Aave community should consider the risk/benefits of keeping an active Aave V3 market on Fantom as this network is dependent on any swap (multichain) bridge.”
Zeller further explained that the Aave v3 Fantom market did not gain noticeable traction, with a current market size of $9 million and $2.4 million of open borrowing. In comparison, the Aave protocol has a total value locked of $3.48 billion. Meanwhile, the Fantom market on Aave only generates approximately $300 per day for the borrowing-lending protocol, of which $30 goes to the Aave Treasury.
If passed, the Aave Improvement Protocol would allow users to repay their debts and withdraw but block further deposits and borrowings in this market. After five days, a community vote will be held to determine the future of Aave v3 Fantom. The Aave team wrote:
“The risk of exposing users to potentially losing millions of $ due to causes exterior to intrinsic Aave security is considered not worth the $30 of daily fees accrued by the Aave treasury.”
Related: Backlash as Harmony proposes minting 4.97B tokens to reimburse victims
Multichain bridging, while praised by some as a pinnacle of interchain communications, has been criticized by skeptics such as Vitalik Buterin for its supposed fragility. Earlier on Tuesday, the Nomad token bridge was drained for $190 million after hackers discovered a single code exploit that anyone could replicate, leading to a “decentralized robbery” as other users joined in on the initial hacker’s siphoning of funds.
After publication, Simone Pomposi, Fantom’s chief marketing officer reached out to Cointelegraph, claiming:
“The Aave governance proposal has been framed as to prevent a potential bridging problem; however, the actual reason behind the proposal seems to be that Aave is not capturing enough market share on the Fantom network to justify the risk. Proposing to remove access to a decentralized app because the business model is faulty/unprofitable makes sense, but blaming it on hypotheticals [related to cross-chain bridges] isn’t fair.”
Be the first to comment