The Gamble Between Polygon and AAVE Guardians: Is the Dual-Currency Design a Blessing or a Curse?

Accompanied by a screenshot of an Etherscan transaction, a debate about the future of the Polygon ecosystem escalated into a public bet of $50,000. The funds have been locked in a custody address managed by a well-known crypto KOL as a third party.

On June 24, 2025, this gamble was officially finalized, with the main characters being two important figures in the crypto world: a core contributor to the Aave ecosystem and the CEO of Polygon Labs.

Their gamble has brought a fundamental issue of the industry into the spotlight: when a leading blockchain ecosystem introduces a second token, is it creating new value or diluting the existing value?

The terms of the betting are clear and strict:

• Bet: 50,000 USD equivalent stablecoin
• Custodian: Well-known crypto KOL
• Data source: CoinGecko
• Settlement time: December 24, 2025, at 8 PM ( UTC )
• Win/Loss Criteria: Whether the total market value of POL and the new token KAT exceeds the market value of POL itself at the time Polygon announced the Katana plan, which is ( $123.87 million ).

Behind this high-stakes gamble lies a clash of two completely opposing views of the cryptocurrency world.

On one side is the "guardian" of the Aave ecosystem. As the founder of the Aave Chan Initiative, he is the most steadfast "risk-averse" individual in the DeFi world. He is firmly bearish on Polygon's "dual-token" model, believing that this approach will only dilute value, ultimately leading to a negative-sum game of "1+1<1".

The other party is "Empire Builder" from Polygon Labs. This ambitious CEO is dedicated to unifying the fragmented blockchain world through the aggregation layer strategy of Polygon 2.0. He argues that sophisticated co-design will break the "spell" and achieve a value leap of "1+1>2."

This is not only a battle of personal reputation and money, but also a public experiment aimed at testing two completely opposite industry development philosophies.

The Match: A Long-standing Ideological War

This public showdown is not a momentary impulse, but rather an eruption of long-standing ideological conflicts between the two protagonists and the protocols they represent.

The conflict between the two parties first publicly escalated in December 2023. At that time, the Polygon community proposed a controversial proposal: to activate the "sleeping" assets on its PoS cross-chain bridge, increasing treasury income through yield farming. From Polygon's perspective, this was a wise move to revitalize assets. However, from Aave's viewpoint, this was akin to playing with fire next to the Aave treasury. Aave holds billions of dollars in assets on the Polygon chain, and the cross-chain bridge is precisely one of the most fragile links in the entire DeFi world. Aave quickly launched a countermeasure in the community, proposing to significantly increase the borrowing costs of related assets on Polygon, using economic means to "punish" what it viewed as reckless behavior, and firmly stated, "Aave should not bear the costs of Polygon's risk experiment."

This conflict clearly outlines the philosophical divide between the two sides: Aave places risk control above all else, like a banker holding a large sum of money, advancing cautiously; while Polygon views ecological growth as the top priority, like an ambitious builder of an empire, unafraid of risks.

The long-standing ideological conflict reached a new boiling point on May 28, 2025, when Polygon officially announced that its ecological star project, Katana Network, would issue its own token, KAT. The Aave side once again invoked the iconic "dual token curse" theory. In the final conversation to settle the bet, the Aave side even sarcastically mocked the Polygon CEO: "This all started six months ago when you guys were doing Pre-PIP, and since then, the price of POL has been falling. This is all a result of your own decision-making."

This charged accusation undoubtedly reveals the deep-rooted nature of the conflict between both parties, adding a layer of personal grievances to what was originally a purely ideological dispute.

The Curse of Aave: Historical Ghosts and the "Double Token Curse"

The pessimistic conclusion from Aave is not groundless; it is deeply rooted in the bloody lessons of cryptocurrency history. The "curse" he mentioned can be referred to as the "dual-token curse"—that is, introducing a second token not only fails to create incremental value but also leads to the destruction of existing value due to distracting community attention, confusing value propositions, and increasing system complexity. There are two famous historical cases that haunt the crypto world like ghosts, providing strong support for his argument.

The first and most tragic one is the death spiral of Terra/LUNA. In May 2022, this massive ecosystem, which once had a market value of 40 billion USD, vanished into thin air in just a week. At its core is a dual-token model: the algorithmic stablecoin UST and its governance token LUNA. UST is pegged to the dollar through a sophisticated arbitrage mechanism, but this mechanism turned into an out-of-control money printer under extreme market pressure. When UST depegged due to panic selling, the arbitrage mechanism required a massive issuance of LUNA to absorb the selling pressure of UST, and the collapse of the LUNA price further exacerbated the distrust in UST, forming an inescapable "death spiral." This case proves in the most extreme way that a dual-token system with inherent design flaws has risks that are not linear but exponential, ultimately leading to a value annihilation of "1+1<0."

The second case is the "community civil war" between Steem and Hive. Unlike the implosion of Terra, this is a story about a split. In 2020, dissatisfied with the acquisition of a certain investor, core members of the Steem community chose to "leave" through a hard fork, creating a brand new blockchain called Hive. This fork is essentially a split of the community and assets. The original network effect was divided in two, liquidity was diluted, and development power was also dispersed. Although there was no Terra-style collapse to zero, the once unified community was torn apart, and the original value was divided between two competing tokens, perfectly illustrating the "value dilution" effect in AAVE's argument.

These two cases, one concerning systemic collapse and the other concerning community division, point to the same conclusion: the dual-token model is prone to backfire. However, Polygon's rebuttal is also based on this: the birth of Katana is neither to maintain a fragile algorithm nor a product of community division. It is an intentional ecological expansion with clear hierarchy and synergy in a grand strategic blueprint. Therefore, simply applying the failed experiences of the former two to Polygon may be a form of seeking a sword by carving a boat. This gamble is, in fact, testing a brand new, unproven third multi-token model.

Polygon's Blueprint: Breaking the Spell with "Aggregation"

In response to historically pessimistic conclusions, Polygon presents a vast, intricate, and ambitious future blueprint—Polygon 2.0. The core of this system is fundamentally aimed at addressing all the issues raised by Aave.

First, Polygon upgraded its core token from MATIC to POL, giving it a new designation as a "super productive token." This is far more than just a name change. Traditional PoS tokens, like MATIC, can only be staked on one chain to earn rewards from that chain. However, the design of POL allows holders to stake it while simultaneously providing security and validation services for countless chains within the Polygon ecosystem, playing various roles such as transaction ordering and generating zero-knowledge proofs. This means that the value of POL is no longer solely tied to the rise and fall of a single chain, but directly linked to the overall prosperity of the entire Polygon "value internet." It can continuously capture value from the economic activities of all chains within the ecosystem, like a pump.

Secondly, there is the "nerve center" of this blueprint - the Aggregation Layer (AggLayer). If the past cross-chain bridges were like bumpy rural roads connecting two independent countries, often plagued by bandits, then AggLayer is like the central terminal of a super international airport. It can unify the liquidity and state of all Layer 2 networks connected to it, enabling nearly instantaneous and trustless atomic cross-chain transactions between chains. This not only fundamentally addresses the cross-chain security issues that Aave was initially most concerned about, but also lays the foundation for a unified and seamless user experience.

Finally, there is another main character in this gamble - Katana. In the grand narrative of Polygon, Katana is not a "second son" competing with POL for resources, but a carefully selected "strategic special forces". Its sole mission is to showcase the powerful capabilities of AggLayer to the world. Katana's design is highly disruptive; it allows only one leading protocol to exist in each DeFi track (such as a certain exchange in the DEX field) on a single chain, thereby concentrating liquidity and avoiding the common problem of liquidity fragmentation found on general-purpose chains. At the same time, it will inject strong economic momentum into these exclusive cooperative protocols through token incentives, real returns, and other means.

This design reveals a deep strategic intention of Polygon: Katana plays a strategic "showroom" role. Its primary value lies not in how high its own market value can soar, but in whether it can successfully prove that AggLayer is a viable technological paradigm capable of attracting massive liquidity and top-tier projects. If Katana becomes a hit, it will become the most dazzling billboard for AggLayer, attracting countless project parties to join Polygon's aggregation ecosystem. This powerful network effect will theoretically greatly boost the demand for POL tokens. The story that Polygon tries to tell is not the "A+B < A" that Aave is concerned about, but rather an exponential growth myth of "(A+B) → A++".

Lessons from the Ghost: Can Polygon Cure Cosmos's "Value Capture Disease"?

The theory is rich, but reality is stark. Whether Polygon's grand blueprint can be realized has one of the most important and also the most brutal references in history - Cosmos.

Cosmos is hailed as the "spiritual mentor" of Polygon's aggregation vision. It was the first to propose the concept of a network composed of countless sovereign, interconnected "application chains". However, despite the emergence of numerous star projects within the Cosmos ecosystem, with their own independent and large market-cap tokens, the value generated by these successes is difficult to effectively flow back and be captured by the ecosystem's core token ATOM. This is known as the "value capture dilemma" of Cosmos. A research report from a well-known exchange once pointed out sharply that the prosperity of the Cosmos ecosystem has historically rarely benefited ATOM holders.

This is precisely the brilliance of Polygon's design and is key to whether it can break the "dual-token curse." Polygon's strategy is not a blind replication of the Cosmos model, but a thoughtful correction aimed at addressing the "Cosmos value capture disease."

The core "prescription" it offers is a mandatory and institutionalized value-sharing mechanism. The most direct aspect is that Katana directly airdrops 15% of its total token supply KAT to POL stakers. This initiative establishes a strong and formal economic link between the new project and the core token right at the beginning of ecological expansion. In the Cosmos ecosystem, application chains can develop freely without "taxing" ATOM holders; whereas in the aggregated ecosystem of Polygon, this "tax" has been institutionalized in the form of airdrops.

This creates a powerful "golden shovel" effect: holding and staking POL is equivalent to having the tool to mine the value of all new projects in the future of the entire ecosystem. This generates direct and continuous purchasing demand for POL, as rational investors will anticipate that all projects graduating from the "Aggregation Layer Breakthrough Plan" will follow the same rules.

Therefore, the real highlight of this gamble is no longer "Will Polygon repeat the historical mistakes?" but rather "Has Polygon already designed a solution that can successfully solve the value capture problem of Cosmos?".

Final Prediction: Who Will Laugh Last?

Now, all the cards have been dealt.