When Aave v1 launched in early 2020, DeFi was still rising to claim its first $1B TVL milestone, and since then, a lot has changed!
- DeFi TVL is up over 50X having just reached over $51B on Ethereum.
- DeFi is just beginning to grow on L2 solutions like Loopring and Optimism.
- DeFi has exploded in growth the last few months on Ethereum sidechains like Binance Smart Chain with just over $10B TVL and Polygon (previously Matic) with over $1B.
While we can lecture about why decentralization and security matter in an L1 like Ethereum, I also remember being a DeFi newcomer. A new user often prioritizes cheap and fast transactions over decentralization and security while working with smaller sums of money. A new user has less to lose starting with $0 in crypto assets and is less likely to swallow large transaction fees.
The goal for most newcomers is to try new DeFi apps, understand how to use them, and get comfortable with self-custody. While I was able to do just that in the summer of 2019 with DeFi apps during the heart of the bear market, new users today face gas costs over 100X what I paid when first trialing Compound and Maker.
I want to be clear I am personally not risking more than a few percent of my portfolio on sidechains like Polygon, BSC, xDAI, and in the future Solana, Polkadot, and Cosmos. However, I think as long as one is informed of the inherent risk using a less secure, and less decentralized sidechain, then anyone can properly manage their risk.
On that note, teams like Aave and my own team at Zapper are building DeFi for a multichain universe. We have our roots in a DeFi metropolis on Ethereum but we’re just beginning to build for faster and cheaper DeFi powered by L2s that inherit the security of Ethereum L1 as well as sidechains that do not.
The first of those multichain opportunities just released with Aave Polygon Market. Today, I’ll walk you through just how easy it is to open an Aave loan for a few cents in a few minutes compared to what previously required $100-$200 with gas prices >200 Gwei.
How to Open a Loan for 2 Cents in 2 Minutes on Aave Polygon Market
Before we get started, please be aware of a few major risks.
- Smart contract risk is always a risk. Soon in May, Nexus Mutual will offer the same cover to Aavev2 cover holders whether you’re on Polygon or Ethereum.
- As I mentioned earlier, Polygon/Matic is less secure and less decentralized and does not inherit the security of Ethereum L1. It’s a separate blockchain that bridges to Ethereum–aka a sidechain.
- Be aware it will cost about $10-$15 in gas to deposit ETH from Ethereum to Polygon via Zapper Bridge.
- As always, this is not financial advice.
Here’s how to open a loan on Aave Polygon Market!
1 – One prerequisite before showing off Aave Polygon Market is we will need ETH on Polygon. Go to zapper.fi/bridge and specify sending ETH (not WETH!) from Ethereum to Polygon. The ETH will be migrated to a form of the most liquid ETH on Polygon/Matic, which sometimes is called Ether (PoS-WETH) but on Zapper we just show it as ETH to keep it simple.
2 – Whenever the Ethereum transaction confirms, it will take 7-8 mins on average for the ETH to show up in one’s Matic wallet, which is the exact same 0x address as one’s Ethereum wallet. Zapper will also deposit 0.01 MATIC for first time depositors, which is all you need to…
Hi! My name is Lark Davis!
I’m a cryptocurrency investor with years of experience and I’ve been making consistent profits in the crypto space.
I’m passionate about helping others do the same, so I run multiple educational channels on crypto investing.
