Aave's Risk Stewards have recommended deprecating the V3 deployment on Scroll by reducing all supply and borrow caps to 1, effectively halting new lending activity while permitting existing positions to close naturally. The move reflects a deliberate wind-down of an underperforming market rather than an emergency intervention, following months of conservative parameter management on a once-promising layer-2 ecosystem.
Scroll's decline has been dramatic. After major protocols like ether.fi announced migrations to Optimism and other chains, total value locked on the network collapsed from roughly $227 million to $23.3 million within days. Stablecoin liquidity plummeted from $55 million to $14 million, while decentralized exchange volume shriveled to under $200,000daily. These metrics signal a fundamental shift in developer and user sentiment toward the chain rather than isolated technical issues. In this context, Aave's Scroll instance—holding just $12.19 million in total value—became an increasingly marginal deployment that required active management to prevent cascading liquidations.
The position composition reveals concentrated risk beneath the surface. Roughly 90 percent of outstanding borrows are denominated in WETH, primarily stemming from liquid staking token looping strategies that amplify yield through recursive borrowing. These positions operate with dangerously thin margins, hovering near health factors of 1.00 to 1.05. The critical detail here is that parameter changes would likely improve rather than deteriorate these positions, since LST-to-WETH exchange rates have historically moved favorably due to increasing staking yields. The remaining 10 percent of borrows in USDC benefit from marginally healthier collateralization ratios above 1.5, reducing acute liquidation pressure in the near term. Risk Stewards have intentionally avoided raising interest rates for now, preferring an organic unwinding strategy that minimizes forced closures.
This deprecation represents a mature protocol response to capital reallocation—a periodic reset that maintains system integrity without punitive parameters. As chains continue to consolidate liquidity toward Ethereum mainnet and dominant rollups, smaller deployments like Scroll's Aave instance may face similar sunset proposals, establishing a template for graceful instance retirement in multi-chain DeFi.