Aave Proposes Shutting Down Six Blockchain Deployments

Aave, the largest decentralized lending protocol, has proposed shutting down its deployments on six blockchains: Sonic, Scroll, zkSync, Metis, Soneium, and Aptos. The proposal affects about $98 million in supplied assets and $15.6 million in debt, according to details from the plan.

Each of the six targeted deployments generates less than $5,000 per quarter in revenue. Metis, Soneium, and Aptos each generate under $1,000 per quarter, according to the proposal. In contrast, Aave's Ethereum mainnet deployment generates more than $142 million annually, and its Base deployment about $4.7 million annually.

Deposits on the affected chains have declined sharply over the past six months. Soneium deposits fell 95%, Aptos dropped 94%, zkSync declined 88% to about $844,000, Scroll fell 86% to roughly $2 million, Metis dropped 79%, and Sonic fell 74% to under $8 million, according to the proposal. The six deployments hold a combined $13 million in deposits, while Aave has roughly $14 billion in deposits across 23 chains.

Aave's borrowers paid about $888 million in interest over the past year. The protocol kept roughly $117 million of that interest, about 13 cents of every dollar. Aave's gross revenue dropped from $198 million in Q1 to $156 million in Q2, a decline of a fifth. Liquidation fees fell from $27 million in Q2 to under $200,000 so far in Q3, according to the proposal.

Under the proposal, existing positions would not be forcibly closed. Instead, markets would be frozen to new deposits, borrowing, and collateral use. Aave will cut supply and borrowing limits to a single token, route 99% of borrower interest to its treasury, and introduce a 5% base borrowing rate, according to the plan.

In December, the Aave Chan Initiative proposed rolling back deployments on zkSync, Metis, and Soneium due to lack of product market fit. The initiative also pushed a rule requiring any future deployment to commit to at least $2 million in annual revenue.