Aave’s USDT pool hits 92.8% utilization after $115M whale withdrawal

One whale took out $114.9M from Aave, taking most of the liquidity in its USDT ￰0￱ loan increased the vault utilization to 92.83%, breaking above the preferred limit of 92%. The whale’s outsized loan broke the balance of vault utilization on Aave, above the maximum threshold of 92%, showing the potential fragility of DeFi lending and threatening to block the funds of ￰1￱ lending has grown in the past year, becoming one of the main sources of ￰2￱ protocols competed on their yield, and the top platforms were usually ￰3￱ remained solvent and had normal loan utilization until now. A single whale went over the threshold with the outsized ￰4￱ whale now holds over $115M in USDT, along with $5M in other ￰5￱ DeFi lending, one of the fears is that user funds are redirected in a non-transparent way to other ￰6￱ over 69B locked in lending, there are fears that decentralized protocols may have the same effect as the FTX ￰7￱ time, however, lenders will have no recourse for recovery from a single legal ￰8￱ Aave in danger of over-utilization?

Over-utilization has become a problem for smaller protocols with riskier ￰9￱ data shows smaller protocols have extremely high utilization , with some choosing forced ￰10￱ recent aggressive borrowing means the lending pools do not see any ￰11￱ liquidity providers also cannot withdraw their funds, despite the promised high returns. I n a recent example of over-borrowing, two vaults on Lista DAO were force-liquidated after reaching 99% utilization with no ￰12￱ vaults used collateral in the form of a risky stablecoin and lent out more liquid ￰13￱ in DeFi refers to the percentage of funds borrowed from a ￰14￱ of November, there are warnings to check the utilization of pools before depositing ￰15￱ protocols have increased their utilization to 92%.

The other problem is the loan collateral, which may also depreciate, leaving lenders with the losses. Currently, Aave holds over $32B in total value locked, and has $21.7B in loans ￰16￱ a whole, the protocol holds sufficient collateral, but some vaults may turn less ￰17￱ the positive side, over-utilized vaults cannot create ￰18￱ protocols may put limitations on to avoid overly-aggressive ￰19￱ expansion of collateral may lead to attempts to over-utilize lending pools, thus essentially leaving the lenders to absorb the losses or claim the ￰20￱ still have the advantage of having a more liquid stablecoin ￰21￱ falls to a one-month low Aave remains the seventh-largest protocol for daily fee production, with a dedicated program to re-buy AAVE ￰22￱ September and October, Aave fees moved to a higher baseline of over $3M daily, adding to the reserves of the ￰23￱ the same time, the AAVE token sank by around 30%.

AAVE traded at around $194 after the latest round of ￰24￱ has also not found support from the promised buybacks as a form of revenue ￰25￱ up to Bybit and start trading with $30,050 in welcome gifts