Aave Changes USDT Borrowing Rules as Utilization Threshold Lowered
Aave has lowered its USDT utilization threshold on its Ethereum Core market, accelerating borrowing cost increases as pool liquidity tightens.
Aave Changes USDT Borrowing Rules as Utilization Threshold Lowered
Aave has lowered its USDT utilization threshold on its Ethereum Core market, accelerating borrowing cost increases as pool liquidity tightens.
Aave USDT Borrowing Parameters Shift
Aave has lowered the utilization threshold at which borrowing rates for Tether’s USDT rise sharply on its Ethereum Core market. According to CryptoSlate, this change makes loans more expensive sooner as pool liquidity tightens across the platform.
The adjustment was executed on Oct. 21 in Ethereum block 26,241,799, shifting the threshold from 94% utilization down to 92%. While borrowers can still go beyond that point, the rate climbs more steeply once they cross the updated boundary.
Modeling the Liquidity and Rate Impact
Using supply balance figures from an Oct. 20 recommendation by DeFi risk service provider LlamaRisk, the shift corresponds to roughly 57.8 million USDT more modeled unborrowed liquidity at the threshold. LlamaRisk had reported 2,892.2 million USDT supplied in its recommendation.
Aave employs a two-slope model that increases borrowing rates gradually up to an optimal utilization point, and more sharply between that point and full utilization. Lowering the kink moves the more expensive part of the curve earlier for active borrowers.
About The Author
