Polygon Faces $300 Million Loss

Polygon is on the verge of losing over $300 million in total value locked (TVL) as the Aave community has voted to halt lending on the PoS chain. Aave, the largest dApp on Polygon, has deposits exceeding $300 million, according to DefiLlama.

The decision was driven by backlash against a December proposal from Polygon to use over $1 billion in bridged stablecoins for generating yield. In response, Aave founder Marc ZELLER proposed imposing strict risk parameters on Aave v2 and v3 on Polygon PoS to discourage deposits and borrowing against collateral.

Zeller argues that Polygon’s revenue generation methods are riskier than those used by other networks, like depositing ETH in liquid staking or DAI in MakerDAO’s savings rate, as these are not subject to bad debt.

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