Aave DAO strategic shift! zkSync abandoned, multi-chain expansion put on hold

Aave DAO is considering shutting down underperforming instances on low-value networks such as zkSync, Metis, and Soneium. These have the lowest total value locked, with Metis’s annualized revenue just over $3,000, far below maintenance costs. The Aave Chan Initiative (ACI) has proposed setting a $2 million annual revenue threshold for future deployments and establishing a stablecoin reserve factor for low-revenue chains.

Aave DAO Considers Sunsetting Three Inefficient Chains

(Source: Aave DAO Snapshot)

Aave is the largest decentralized lending protocol built on Ethereum to date, and has historically taken an aggressive approach to deploying on new blockchains. According to The Block, Aave launched in 2018, accounts for over 81% of Ethereum’s outstanding debt, and operates on at least 18 blockchains, including numerous Ethereum Layer 2s as well as other Layer 1s such as Aptos and Sonic.

However, Aave DAO’s main delegate platform, ACI, now appears to want to roll back some expansion plans. “Aave maintains multiple V3 instances, each with operational costs and risk exposure. It is believed that some of these instances generate revenue insufficient to offset their costs and risks,” an ACI representative wrote in a “situational check” in late November.

According to forum discussions, ACI’s Growth Service Provider (Growth SP) has proposed rolling back Aave instances on zkSync, Metis, and Soneium networks, as these have “proven to be out of sync with market demand.” Compared to other Aave deployments, these three chains have the lowest total value locked, making up only a small fraction of Aave’s total revenue.

For example, Metis, co-founded by Vitalik Buterin’s mother Natalia Ameline, currently has annualized revenue just over $3,000. Soneium fares slightly better, with annualized revenue exceeding $50,000. By contrast, Aave’s largest deployment on Ethereum mainnet generates over $142 million in revenue, and Base brings in $4.7 million. This vast revenue gap exposes a fundamental issue with the multi-chain expansion strategy: not all blockchains generate enough demand to justify deployment costs.

ACI wrote, “Beyond low revenue, some of these chains require additional engineering work to onboard any new assets, which is not feasible given current service provider workloads and low returns.” This candid assessment reveals the real challenges DeFi protocols face in multi-chain expansion: maintenance costs, engineering resources, and risk management are not unlimited.

$2 Million Annual Revenue Threshold & Reserve Factor Mechanism

As part of its proposal, ACI also recommends setting a $2 million annual revenue minimum for future deployments and establishing a stablecoin “reserve factor” for other low-revenue chains. What’s the rationale for the $2 million threshold? ACI believes deployment only makes economic sense if a chain can generate enough revenue to cover engineering maintenance, risk monitoring, and governance costs.

ACI notes that Polygon, Gnosis, Optimism, Scroll, Sonic, and Celo could be candidates for additional reserve requirements. These reserves would lock stablecoins such as Aave’s GHO or Wrapped ETH to boost revenue. The logic behind the reserve factor mechanism is: if a chain cannot organically generate sufficient income, it should provide extra value to Aave DAO by locking assets.

The Two Policy Tools Proposed by ACI

$2 Million Annual Revenue Floor: All future new deployments must demonstrate they can hit this revenue level, or they will not be approved.

Stablecoin Reserve Factor: Existing low-revenue chains must lock GHO or WETH as compensation, increasing their value contribution to the DAO.

As of now, the Aave DAO Snapshot vote, which ended December 5, received 100% approval. Interim votes are typically considered the first step in governance, serving as a way to gauge sentiment and open dialogue. If the situational check passes the Snapshot vote, ACI can publish an Aave Request for Comment, followed by a formal vote.

Intense Debate and Division Within the Community

While this is not yet a formal governance process, the vigorous debate could signal a strategic shift at the largest decentralized lending protocol. TokenLogic, Aave’s governance advisor, tends to favor scaling back Aave’s multi-chain strategy, including sunsetting the “structurally unviable” deployments on zkSync, Metis, and Soneium. However, TokenLogic is more cautious about other underperforming chains (such as BNB Chain, Polygon, and Optimism), arguing they represent “important strategic positions.”

Marc Zeller, ACI co-founder, separately posted that exceptions could be made for low-revenue chains based on certain tradeoffs. “Celo has a large user base and low maintenance costs; I am currently not in favor of sunsetting this instance,” Zeller argued. This flexibility shows that Aave DAO is not blindly maximizing revenue but will also consider strategic value, user base, and maintenance costs.

Some other AAVE governance token holders also call for a more cautious approach to sunsetting. Governance participant Nano pointed out that ACI’s proposal could lead to a dangerous situation where only large instances like Aave on Ethereum, Base, Avalanche, and Arbitrum would remain.

Nano wrote: “This would drastically reduce Aave’s impact across the ecosystem and significantly shrink its potential user base. This kind of concentration runs counter to the overall market trend, where multi-chain expansion is seen as a key growth driver and most projects are striving to be available on more chains, not fewer.”

This view represents another faction within the community: multi-chain presence itself is a reflection of brand value and ecosystem influence. Even if some chains generate less direct revenue, they may bring long-term strategic value to Aave, including user acquisition, technical experimentation, and market positioning.

Complexity of Incentive Mechanisms and Strategic Considerations

It’s worth noting that Aave often receives incentives to deploy on new blockchains. For example, zkSync airdropped the most ZK tokens to the protocol among all “native projects,” even though it hadn’t launched on that chain yet. This incentive mechanism reveals the complex motivations behind multi-chain expansion: protocols consider not only direct revenue but also token incentives, strategic partnerships, and ecosystem positioning.

However, Aave DAO now seems to be reassessing this incentive-driven expansion strategy. If a chain cannot generate sustained organic demand after incentives end, initial token rewards may only provide short-term benefits and become a maintenance burden in the long run. Furthermore, the DAO has voted against certain deployments, such as its decision to skip Ethereum Layer 2 Mode, showing the community is becoming more discerning.

This debate over multi-chain strategy reflects a fundamental issue facing the entire DeFi industry: in a fragmented multi-chain ecosystem, should protocols pursue maximum coverage or targeted deployment? Aave DAO’s strategic adjustment may provide important lessons for other DeFi protocols.