Overview
- Circle chief economist Gordon Liao filed an Aave v3 proposal that would lift the USDC borrow-rate slope to 40% now with a 50% target under stress and would lower the pool’s optimal utilization.
- Aave’s USDC market has sat near full utilization for days after the KelpDAO rsETH exploit, leaving less than $3 million in free liquidity as about $60 million of USDC supply exited in 24 hours.
- Utilization shows how much of a pool’s deposits are already lent out, and steeper rates raise what lenders earn and what borrowers pay, which can pull in new deposits and reopen withdrawals.
- Risk analysts warn the higher rates could push leveraged users toward liquidation, with one estimate flagging about $70.1 million of debt that could move closer to being liquidated over 30 days.
- Aave founder Stani Kulechov said the idea is one option under review, on-chain data show total value locked near $15.3 billion, and community debate includes questions about why Circle has not added direct USDC liquidity while the KelpDAO attacker’s funds have been moving through THORChain.