Aave Governance Considers Deploying on V3 on Solana
Aave Governance is considering a proposal to deploy the v3 of the lending protocol on Solana through Neon EVM.
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DeFi protocol Aave is considering deploying Aave v3 on Solana through Neon EVM. The proposal for the integration is on the Aave governance forum at its "temperature check phase," where community members can comment on whether it is a good idea.
The proposal was submitted by the Neon Foundation and Aave Chain Initiative. It could see the expansion of the Aave protocol to the Solana blockchain. If approved, the integration of Aave v3 will be in phases. According to the proposal, it would start with three collaterals, SOL, mSOL, and jitoSOL, with USDC being the only asset available for lending.
"This proposal suggests deploying Aave V3 on Neon EVM Mainnet with limited deployment of initial assets and conservative risk parameters.This approach will enable Aave to strategically establish a presence in the Solana ecosystem while minimizing risk exposure."
Neon EVM is a smart contract layer on Solana that deploys Ethereum Virtual Machine code. It has been allowing Ethereum developers to build EVM-based applications for Solana, and a version of Aave V3 is already on the Neon EVM testnet for developers.
However, the proposal must go through three stages before final approval. If there are generally positive sentiments in the first phase, there would be an ARFC stage to discuss the proposal and evaluate risk parameters. The final decision would involve voting on the proposal by the Aave DAO.
SOL Continues to Struggle
The news of the proposal caused a brief surge in SOL value. But the gain was short-lived as SOL still fell 3% today to trade at $96.Aave is the leading lending protocol with over $5 billion in total value locked across ten blockchains. Most of this TVL is on Ethereum.
SOL price performance today highlights a recent trend for the token. Since the start of the year, SOL has dropped 12% and looks stuck in the $90 - $100 range. This contrasts with its high-flying performance in the last few months of 2023. Its price decline over the last 24 hours caused a $7 million liquidation for those with SOL positions, especially those long on the asset.
The poor price performance is further compounded by the general decline in activity on the network. Transaction volume on Solana has declined since peaking in the first week of January. Per data from the defillama, Solana's volume fell from $2.607 billion on December 22 to $706 million by January 14.
The number of active addresses has dropped from a peak of 981k on December 21 to 599k. With the price and activity falling, Solana TVL has also dropped from its year high of $1.417 billion to $1.347 billion.
