Aave Protocol is undergoing a restructuring that closes specific Layer-2 systems and allocates $100 million to expand the GHO stablecoin. The move aims to concentrate resources on higher-return networks and could reshape liquidity and usage across Aave. The decision affects users, developers, and GHO holders, and has sparked community disagreement over strategy and access.
Context and impact
The Aave DAO frames the decision around how revenue is allocated, citing performance concentration on Mainnet. According to Aave Chan Initiative (ACI), over 86.6% of Aave’s revenue comes from Mainnet, supporting a plan to shut down underperforming L2s and redirect resources to networks with CeDeFi links, large distribution agreements, or important native components.
Aave will allocate $100 million to make GHO more common and position it as a major decentralized stablecoin. The plan includes utility additions, protocol changes, and exploring institutional finance use cases through systems like Horizon. ACI targets a GHO supply of $1,000 million by the end of 2025, promising higher returns than traditional lending while concentrating operational and reputational focus on a single product.
Focusing on Mainnet and GHO could improve capital efficiency and protocol revenue. However, shrinking the L2 footprint introduces trade-offs: potential loss of innovation and access on closed networks, increased reliance on GHO’s progress and market perception, and liquidity impacts for markets built on local setups. The community remains divided over profitability goals versus broad, multi-chain presence.
Regulation, technical details and implications
Regulation and compliance
The material provides few details about regulatory measures like KYC/AML. The DAO’s message focuses on revenue and product adoption without specifying rules, permits, or special permissions tied to the plan.
Technical detail
CeDeFi is cited as a factor in network selection through distribution partnerships with centralized groups. GHO—Aave’s native stablecoin—sits at the center of the strategy, supported by technical additions such as CCIP Bridge and GSM L2 to facilitate cross-chain payments and actions. A Liquidity Premium algorithm for V4 serves as a structural adjustment designed to improve revenue.
Implications
Users, developers, and GHO holders will feel changes in liquidity, access, and resource allocation. Consolidating operations may streamline capital use and returns but reduces experimentation on L2 and heightens dependence on GHO’s adoption, amplifying both upside and risk.
The restructuring signals consolidation and a substantial bet on GHO. Its success will hinge on technical delivery and market traction to achieve the stated $1,000 million supply by the end of 2025, while the community debate over growth versus multi-chain reach continues.
