Another Ethereum DeFi dapp migrates to layer-2
N.B Polygon is formally Matic. The token is still denoted as MATIC.
Leading Ethereum liquidity protocol Aave has launched on layer-2 solution Polygon to massive success. Polygon and Aave are spearheading a campaign called #DeFiforAll, which aims to show that decentralized finance can be used by anyone regardless of the size of their portfolio.
Aave is a non-custodial liquidity protocol for earning interest on deposits and borrowing assets. In the last 7-days, the number of users on the Polygon version of Aave swelled to over 2.4k, transactions have exploded by 2340% up to over 14,000. Furthermore, the transaction volume grew to over $248 million at the time of writing. Aave launched on Polygon last month as part of a wider plan to make DeFi on Ethereum more scalable.
Polygon has allocated $40 million in rewards (1% of the total MATIC supply) for lenders and borrowers. Therefore users can earn rewards by depositing and borrowing assets on Aave’s Polygon market. The MATIC rewards for the liquidity mining program will be distributed in two phases: Polygon will payout 0.5% of the total supply from today until June 14th, and another 0.5% between June 14th and April 13th, 2022.
The supported markets are AAVE, DAI, ETH, MATIC, USDC, USDT, and WBTC plus additional rewards will come from the Polygon-built decentralized exchange QuickSwap. When users bring amTOKENS, for example amUSDC, to provide liquidity on QuickSwap, they will receive QUICK rewards from a pot of over $5 million allocated to Aave growth.
However, putting amTOKENS directly in QuickSwap has major problems as it will cause users to lose Aave interest and MATIC token rewards. vamTOKENS have been created to combat precisely this issue.
Through converting amTOKENS to vamTOKENS, and then putting vamTOKENS into QuickSwap pools, users keep their earned Aave interest and keep the MATIC liquidity farming rewards. In addition, they earn QUICK liquidity farming rewards, and trading fees at the same time. For more information on these rewards, how vamTOKENS work, and how to use them check here.
Polygon keeps growing
With Ethereum gas fees still riding high, It’s no surprise that several protocols are attempting to take Ethereum’s crown. However, Polygon and Ethereum can be considered allies due to the fact, that Polygon has been designed to build out and scale Ethereum, rather than compete. Moreover, many leading Ethereum dapps have now ported contracts to Polygon.
Including the popular DeFi protocol Sushiswap, blockchain games Aavegotchi and Decentraland, prediction market Polymarket, and NFT projects OpenSea and SuperFarm. Infrastructure projects such as Graph and Chainlink have expanded to Polygon as well. Since October 2020, the total value locked on Polygon has grown from less than $5 million to $482 million at the time of writing.
Aave is arguably the most notable DeFi dapp to integrate with Polygon, while partnerships with Polygon finance dapps such as Quickswap are aimed at generating much-needed liquidity for the platform.