Polygon, one of the largest Ethereum layer-2 networks, has accused DeFi lending platform Aave of engaging in monopolistic practices.
This dispute stems from a proposal to allocate locked bridge funds to return-generating strategies, which Aave opposes. The tension escalated after the lending protocol threatened to withdraw its deployment from Polygon’s network.
The controversial proposal has been rejected by the Polygon community.
‘Monopolistic tactics’
In a December 17 statement, Polygon accused Aave of resorting to threats after initially supporting a similar proposal.
According to Polygon, Aave’s resistance stems from the involvement of Morpho, a competing protocol whose proposal gained traction thanks to promises of significant ecosystem subsidies. It added:
“Whether you support or oppose Pre-PIP, no one should fear retaliation for submitting ideas or participating in formal governance processes. Progress comes from constructive debate, not from closing doors to those who bring new perspectives.”
The founder of Polygon, Sandeep Nailwal, also criticized Aave’s approach as anti-competitive and damaging to the spirit of Web3. He pointed out that Aave’s earlier proposal failed to gain traction, unlike Morpho’s, which delivered significant benefits to the Polygon ecosystem.
According to him, Polygon would do that not be intimidated by monopolistic tactics or aggression and continue to explore innovative mechanisms to achieve greater success. He added:
“Our commitment is to a thriving, competitive and truly decentralized DeFi ecosystem that serves the best interests of all users and builders. The Polygon community will continue to push the boundaries of what is possible and firmly oppose any action that undermines Web3’s principles.”
Furthermore, Marc Boiron, CEO of Polygon Labs, accused Aave of using fear and centralized governance to suppress competitors. He described direct messages from Aave team members as intimidation attempts to dissuade Polygon’s board from supporting Morpho’s proposal.
Boiron called for greater responsibility and urged the DeFi community to reject monopolistic behavior.
He added:
“Aave, like yesterday, will be seeking support to respond to this tweet and others to maintain the control they have over lending in this sector. However, new players are emerging that will create a better Web3 future.”
Response from Aave
Aave’s founder, Stani Kulechov, defended the protocol’s position, emphasizing that the DAO acted to protect users from third-party risks.
He argued that the lending protocol’s management process reflects a commitment to user safety, dismissing claims of anti-competitive behavior as a distraction from real concerns.
He stated:
“The most important feedback for Polygon was that Polygon users were dissatisfied with a network that used their money for risky investments without permission. The fact that Aave opened the discussion and took action to protect users is exactly what DAOs should be doing.”
