With a $50,000 bet against Aave, will Polygon's SGD KAT be able to sustain its dual-currency ambitions?

Original title: "Behind the $50,000 bet, why is Polygon's SGD KAT not welcomed?" Original

Author: Ding Dong, Odaily Planet Daily

Yesterday, Marc Zeller, a core member of the Aave community, posted on X that when an ecosystem spins off a second token, the total market capitalization of both will eventually be lower than the market cap of the original tokenFor example, Polygon's Katana Network, which is launched after POL, will also issue a new coin, KAT, and the combined market capitalization of the two is expected to be lower than the market value of POL at the time of the announcement of the Katana plan. Polygon Labs CEO Marc Boiron was so unhappy with the news that the two sides made a $50,000 bet on the market value of POL and KAT six months later.

This is not only a bet on the performance of the market, but also a question about the future direction of Polygon's multi-currency strategy, ecological governance philosophy, and even DeFi.

Background and strategic intent of Polygon's new coin, KA

Katana Network is the latest strategic project in the Polygon ecosystem, initiated by the Katana Foundation and jointly incubated by Polygon Labs and GSR Markets. The network is positioned as a private blockchain focused on DeFi scenario optimization, and plans to launch a public mainnet in June 2025, focusing on deeper liquidity integration and more predictable lending rates, with the intention of building a more stable and efficient DeFi lending environment.

Katana was joined by its native token, KAT. The functions of KAT cover two core modules: ecological governance and liquidity incentives. Among them, 15% of KAT tokens will be distributed to POL stakers on Ethereum in the form of airdrops, trying to realize the linkage between the old and new ecosystems through the original user system, so as to enhance community stickiness and stabilize the market confidence of Polygon's core assets.

The issuance of KAT is an important part of Polygon's strategic restructuring. In June, Polygon founder Sandeep Nailwal announced his appointment as the foundation's CEO, marking a complete takeover of the ecological strategy. He emphasized that Polygon will gradually deprecate zkEVM and focus its resources on two directions: one is Polygon PoS, which focuses on stablecoin payments and RWA asset integration; The second is AggLayer, which aims to provide incubation, funding, and resources to support the development of projects within its PoS ecosystem, and successful projects will airdrop 5% to 15% of the total supply of their native token to POL stakers and connect to the Agglayer network. This means that Polygon will return to a sustainable growth path rather than relying solely on technology stacking.

Katana and KAT were launched in this context to complement the increasingly thin DeFi pillar of the Polygon PoS ecosystem, especially after the withdrawal of heavyweight agreements such as Aave and Lido, resulting in the loss of more than $300 million in TVL, the launch of KAT has become an important move for Polygon to revitalize the ecosystem. Through new coin issuance, airdrop incentives, and dedicated infrastructure construction, Polygon hopes to reactivate TVL's growth momentum and attract developers and users back into the ecosystem.

On a broader scale, Polygon's move is also a response to the competition in the Layer 2 ecosystem. Led by modular solutions such as OP Stack and Arbitrum Orbit, Polygon is trying to differentiate itself with DeFi depth and asset integration capabilities.

The source of the conflict between Aave and Polygon

The spark for the Polygon-Aave conflict came in December 2024, when Polygon proposed a yield generation proposal to leverage its more than $1 billion stablecoin assets bridged to PoS chains for cross-protocol yield mining.

This proposal has caused fierce opposition in the Aave community. Marc Zeller, a core member of the Aave community, believes that Polygon's approach to revenue generation is too risky and can lead to bad debt problems. Some community members have likened it to the "shadow banking" model of traditional finance, believing that high-risk operations that are not fully disclosed may threaten the safety of funds.

In response to Polygon's proposal, Zeller proposed a change in risk parameters on the Aave PoS chain: a loan-to-value (LTV) ratio of 0% for all assets and an increase in the reserve ratio to 85%. The proposal was overwhelmingly passed with 690,000 votes in favor and 117,000 against, and Aave announced a gradual withdrawal from the lending market on the Polygon PoS chain.

Marc Boiron, CEO of Polygon Labs, expressed strong dissatisfaction, believing that Aave's withdrawal not only limits the revenue generation potential of the Polygon ecosystem, but also may weaken the attractiveness of the PoS chain to developers and users, affect the prospects of long-term cooperation between the two sides, and even have anti-competitive tendencies.

Subsequently, Aave co-founder Stani posted a clarification on X, saying that Aave's move was not against Polygon or hindering its development, but out of responsibility for the safety of users' funds. He pointed out that Polygon's introduction of high-risk proposals without communicating with the partnership agreement deviated from the principles of openness and transparency that DeFi should have, and failed to provide effective protection against potential bad debts. The two sides had a fierce confrontation over the risk of proposals, the control of assets, and the boundaries of governance power, which was a dispute over the agreement on the surface, but in essence a collision between the concept of governance and the cooperation mechanism.

In addition, Lido also announced the termination of the Polygon PoS Chain staking service in December 2024, citing low user adoption, insufficient incentives, and uncertainty about the development of the ecosystem, and users need to withdraw their funds by June 16, 2025. This move further weakens the DeFi ecosystem of the Polygon PoS chain.

At the same time, there is a crisis of confidence within Polygon. Following Jaynti Kanani and Anurag Arjun, the third co-founder, Mihailo Bjelic, announced his resignation from the Foundation's Board of Directors. "As the project evolves, it's only natural for visions to change and even diverge, and I'm no longer at the best for Polygon," he said in a statement, indicating that there are internal differences of opinion on the new strategy.

Conclusion: Behind the gamble, there is a contest of trust

KAT is not the end of Polygon, but a test in its reshaping of the DeFi narrative.

From an opportunity perspective, the liquidity integration and predictable interest rate mechanism advocated by Katana Network indeed responds to the core demands of the current DeFi market for stable income and risk control. If successful, KAT will become a new growth engine for the Polygon ecosystem, injecting new vitality into the PoS chain and is expected to attract a new wave of developers to settle in.

But the risks are just as clear. The issuance of KAT may dilute the value of the original POL, especially when the governance mechanism of the dual-token ecosystem has not yet been clarified, which may cause users and developers to have a sense of uncertainty about governance rights and incentive mechanisms, and further exacerbate the wait-and-see sentiment in the market.

The reason why this incident has attracted attention is not just because of the $50,000 bet, but because it reflects the most fragile nerves of the crypto ecosystem today: the trust between protocols, the transparency of community governance, and the boundaries of users' security of assets.

Whether KAT can prop up a new narrative remains to be seen. But what is certain is that the future prosperity of the crypto world will not be sustained by a jump in market capitalization alone, but will be built on open collaboration between protocols, open governance, and user trust.

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