The economics behind Aave proposal to ditch 6 chains that earn loose change in revenue

Aave, the largest decentralized lending protocol, is considering a proposal to abandon six of the blockchains it had expanded onto, in a cleanup affecting about $98 million in deposits. The proposal would see Aave retire “low-adoption” asset markets and 21 expired Pendle principal tokens across 11 Aave deployments, while shutting down its presence on Sonic, Scroll, zkSync, Metis, Soneium and Aptos entirely.

The arguments is based on economics. Each of the six deployments now generate less than $5,000 a quarter. Metis, Soneium and Aptos bring in under $1,000 each, according to the proposal. That does not cover the cost of running them, which includes maintaining price feeds, liquidation systems and monitoring for each market.

For context, Aave’s Ethereum mainnet deployment generates more than $142 million a year and Base about $4.7 million, while Metis produces roughly $3,000.

Deposits have collapsed across all six over six months. Soneium fell 95%, available liquidity on Aptos dropped 94%, zkSync declined 88% to about $844,000, Scroll fell 86% to roughly $2 million, Metis dropped 79%, and Sonic, the largest of the group, fell 74% to just under $8 million.

The six hold a cominbed $13 million in deposits against Aave’s roughly $14 billion across 23 chains, DefiLlama data shows, or under 1% of the protocol’s assets.

Aave’s borrowers paid about $888 million in interest over the past year, but almost all of it flows straight back out to the people who supplied the money. Aave itself kept roughly $117 million, according to DefiLlama, or about 13 cents of every dollar collected. The quarterly accounts show the same split. Of $156 million in gross revenue in the second quarter.

The numbers stop being marginal and become trivial when applied to six chains. Each generates under $5,000 a quarter in revenue, and Metis, Soneium and Aptos bring in less than $1,000 each. At Aave’s usual take, the protocol’s own share of a $5,000 quarter is a few hundred dollars. Metis, on those terms, is worth roughly the price of a dinner.

The timing is explained by the bottom line, which is falling. Gross revenue dropped from $198 million in the first quarter to $156 million in the second, a decline of a fifth. Third-quarter figures are one month old and running well below that pace, with liquidation fees the clearest casualty, down from $27 million in the second quarter to under $200,000 so far.

Existing positions would not be forcibly closed. The markets would be frozen to new deposits, borrowing and collateral use, with supply and borrowing limits cut to a single token, 99% of borrower interest routed to Aave’s treasury and a 5% base borrowing rate introduced, making it expensive enough to stay that remaining users leave on their own.

The proposal could be seen as the logical conclusion of Aave’s new direction that was set out months ago. In December, the Aave Chan Initiative proposed rolling back deployments on zkSync, Metis and Soneium as having “proven to lack product market fit,” and pushed a rule requiring any future deployment to commit to at least $2 million in annual revenue.

Aave has cast the cleanup as risk reduction as much as cost-cutting: one factor overlaps the other.