Summary
LlamaRisk supports these adjustments. Given the persistently tight market conditions, aligning the protocol more closely with broader rates is essential. Lowering slope1 would help achieve this while mitigating further borrow volume contractions. However, due to persistent volatility, rates are expected to vary more. Therefore, it is important to continuously monitor the evolving utilization rates, as @ChaosLabs has been proactively doing.
At the time of writing, the utilization rate for stablecoins remains below the optimal threshold. Below, we provide a breakdown of how borrow rates would be impacted across major stablecoin markets:
| Asset, Market | Current Borrow Rate, APY | New Borrow Rate, APY |
|---|---|---|
| USDC, Core | 6.38% | 5.01% |
| USDT, Core | 6.4% | 5.08% |
| DAI, Core | 7.98% | 6.23% |
| USDC, Arbitrum | 6.84% | 5.36% |
| USDC, Base | 7.1% | 5.55% |
| USDC, Avalanche | 6.89% | 5.4% |
| USDT0, Arbitrum | 7.79% | 6.09% |
Regarding GHO, with the current borrow rate ranging from 4.51% to 6.45% on Core, the proposed changes would keep it aligned with — or slightly discounted compared to — the adjusted stablecoin borrow rates. As a result, no immediate action is recommended for Aave’s stablecoin.
Disclaimer
This review was independently prepared by LlamaRisk, a community-led decentralized organization funded in part by the Aave DAO. LlamaRisk is not directly affiliated with the protocol(s) reviewed in this assessment and did not receive any compensation from the protocol(s) or their affiliated entities for this work.
The information provided should not be construed as legal, financial, tax, or professional advice.