Aave (AAVE) has deployed its lending market on Sonic, a high-performance Blockchain developed from Fantom.
This is Aave's first Layer-1 expansion this year, marking progress in its efforts to expand across Blockchains.
The deployment of Aave version 3 on Sonic follows a governance proposal vote approved by contributors and the Aave Chan Initiative.
Sonic has pivoted and rebranded from Fantom, with the project's mainnet launched in December 2024. The network currently has a total value locked (TVL) exceeding $700 million, providing revenue-generating transaction fees for developers.
According to Aave, Sonic's revenue model allows decentralized protocols like Aave to earn a portion of the transaction fees through user-generated activity. Therefore, the transaction fee revenue stream could be an additional income source for Aave.
"Sonic's focus on a revenue-sharing model and the high caliber of the development team creates an attractive opportunity for Aave to expand its reach, participate in the growing DeFi ecosystem, and engage with the community," said Stani Kulechov, founder of Aave Labs.
Aave's expansion to Sonic is supported by liquidity commitments, including a $15 million investment from the Sonic Foundation, up to 50 million S tokens, and $800,000 in stablecoins from Aave and migration incentives.
This coincides with the decision by the Aave governance to cease lending operations on the Polygon PoS chain due to potential risks associated with the use of over $1 billion in bridged stablecoins to generate yield. Although Polygon rejected this proposal, they were unable to change the stance of the Aave contributors.
"The Aave community is very focused on risk management. After extensive discussion on the Aave forum, the community decided that due to the fundamental risk factors in the initial proposal, lending operations on Polygon needed to be halted," Kulechov said in a statement.
Aave was launched on Ethereum in 2018 and has since expanded to include several Second-Layer Solutions, such as Arbitrum, Base, Optimism, Polygon, Metis, and Scroll. It also operates on Avalanche, Gnosis Chain, and BNB Chain. Aave's total value locked across these chains currently exceeds $19 billion.
You can view the AAVE price here.
Disclaimer: This article is for informational purposes only and not investment advice. Investors should do their own research before making any decisions. We are not responsible for your investment decisions.
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