The proposal would halt new deposits, borrowing and collateral on low-activity deployments while leaving existing positions open, as the protocol shifts focus to networks generating stronger revenue.
AAVE dropped nearly 7% on Saturday, slipping below $90 as traders sold the token while the market assessed a proposal to wind down six low-activity Aave deployments. At the time of writing, AAVE traded at $89.64 after falling from an intraday high above $97.21, while 24-hour trading volume rose 24.57% to about $322 million, a sign of heavier selling rather than fresh buying. The proposal targets Sonic, Scroll, zkSync, Metis, Soneium and Aptos, and also calls for removing 21 expired Pendle principal token markets across 11 Aave deployments. Aave said the economics of those markets have deteriorated, with each of the six networks generating less than $5,000 in quarterly revenue and Metis, Soneium and Aptos bringing in under $1,000 each. Those returns compare with more than $142 million a year from Aave’s Ethereum deployment and about $4.7 million annually from Base. Activity on the six networks has also weakened sharply over the past six months. Deposits on Soneium have fallen by 95%, Aptos by 94%, zkSync by 88%, Scroll by 86%, Metis by 79% and Sonic by 74%, leaving Sonic with just under $8 million. Together, the six networks now hold about $13 million in deposits, versus roughly $14 billion managed by Aave across 23 blockchains, or less than 1% of total assets. The plan would not liquidate users or force them to close positions. Existing positions would remain open, but the affected markets would stop taking new deposits, borrowing and collateral. Supply and borrowing limits would be cut to one token, 99% of borrower interest would be redirected to Aave’s treasury, and a 5% base borrowing rate would be introduced to encourage users to exit gradually. The selloff followed a recent rally in which AAVE rose 4.86% over 24 hours on July 27 to $100.96 as DeFi (blockchain-based finance) sentiment improved. At that time, CoinMarketCap data showed Aave’s Total Value Locked, or TVL (assets deposited in a protocol), at about $14.63 billion. TradingView indicators now point to weakening momentum, with multiple moving averages on “Strong Sell” and oscillators showing a “Sell” rating. The proposal also echoes a December recommendation from the Aave Chan Initiative to roll back deployments on zkSync, Metis and Soneium, saying they had “proven to lack product market fit,” while suggesting future deployments should be expected to generate at least $2 million in yearly revenue.