Circle Proposes Aave Rate Overhaul to Fix USDC Liquidity Crisis
BeInCrypto
Circle's Chief Economist Gordon Liao proposed adjusting Aave's interest rate model to address severe USDC liquidity shortages on Ethereum.Summary
Circle's Chief Economist Gordon Liao has submitted a governance proposal to recalibrate Aave's USDC interest rate model on Ethereum to resolve critical liquidity shortages. Following a recent exploit that triggered massive borrowing, Aave's USDC utilization remained near 100%, causing a liquidity crunch. The proposal suggests a two-step adjustment to interest rate parameters, specifically raising "Slope 2" to increase borrowing costs, thereby incentivizing capital inflows and restoring market equilibrium. Aave founder Stani Kulechov confirmed the team is actively working toward a resolution as the protocol awaits further input from risk service providers.
(Source：BeInCrypto)