title: [Risk Stewards] September 2026 - WETH Interest Rate Adjustment on Base
author: @TokenLogic
created: 2026-09-17
Summary
In August, WETH Slope1 was reduced to 2.20% on Ethereum Core, Arbitrum, and Optimism, while Base remained unchanged. This publication proposes two changes to the WETH interest rate curve on Aave V3 Base: reducing Slope1 from 2.50% to 2.30% and raising Uoptimal from 90% to 92%.
Motivation
Overview
WETH on Base is the second largest ETH borrowing market on Aave, with approximately 69K WETH ($171M) of variable debt against 85K WETH ($211M) of supply. Utilization held between 87% and 89% through late August and early September, then fell to 81% over the last two weeks: borrowers repaid roughly 7K WETH from the 76K peak of 22 August while deposits recovered from 82K to 85K. The variable borrow rate followed utilization down, from around 2.50% to 2.27% APY, against a Uoptimal of 90%.
WETH on Aave V3 Base: user deposits and active loans in WETH, daily, last 90 days. Source: TokenLogic dashboard.
WETH on Aave V3 Base: utilization against the 90% Uoptimal, daily, last 90 days. Source: TokenLogic dashboard.
Demand on Base is driven by leveraged staking strategies in the ETH correlated eModes. cbETH deposits have grown from approximately 3.1K to 45.7K tokens ($128M) since May 2026, supported by a borrow-side incentive campaign on the cbETH to WETH loop that continues to run. A further $107M of weETH, wstETH and wrsETH collateral sits on the market with no borrow incentive attached, relying on the organic borrow rate alone.
cbETH on Aave V3 Base: user deposits in cbETH, daily, last 90 days. Source: TokenLogic dashboard.
ETH Borrow Rate Update
After the August adjustment, the WETH borrow rate is 2.08% APY on Ethereum Core, 1.98% on Arbitrum and 1.98% on Ethereum Lido, against 2.29% on Base. A 20 bps reduction brings Base within 10 bps of the other markets, which matches the yield premium of its dominant collateral, cbETH, over stETH, reverses the utilization decline of the last three weeks, and lets utilization move back from its current 81% toward the 92% Uoptimal.
| Market | Supplied WETH | Borrowed WETH | Utilization | Borrow APY | Supply APY | Slope1 | Uoptimal |
|---|---|---|---|---|---|---|---|
| Ethereum Core | 2,102K | 1,765K | 86.1% | 2.08% | 1.48% | 2.20% | 92% |
| Arbitrum | 97.5K | 55.4K | 81.9% | 1.98% | 0.95% | 2.20% | 92% |
| Base | 85.2K | 69.3K | 81.4% | 2.29% | 1.58% | 2.50% | 90% |
| Ethereum Lido | 18.8K | 15.8K | 84.2% | 1.98% | 1.41% | 2.14% | 92% |
| Optimism | 8.4K | 5.7K | 68.0% | 1.68% | 0.97% | 2.20% | 90% |
cbETH currently yields 2.35% (2.37% on a 30-day average), weETH 2.32% and wstETH 2.25%. At a 2.29% borrow rate, a cbETH loop earns 6 bps per turn of leverage before incentives, a weETH loop 3 bps and a wstETH loop is negative. For comparison, on Ethereum Core the equivalent wstETH loop earns 17 bps per turn. Leveraged strategies cannot be expected to carry utilization from 81% to the Uoptimal at a rate equal to their yield. Repayments over the last three weeks, made while the borrow rate sat between 2.4% and 2.5%, are consistent with strategies unwinding once the rate moved above their collateral’s yield.
WETH on Aave V3 Base: variable borrow APY, daily, last year. Source: TokenLogic dashboard.
Setting the Slope1 just below the yield of the dominant collateral enables the market to clear near the Uoptimal. On Ethereum Core, the 2.20% Slope1 sits 3 bps under the stETH yield at the kink. On Base, 2.30% sits 2 bps under the cbETH yield. Revising Slope1 below 2.30% would forgo revenue and require broader implementation across other instances to ensure consistency across the liquidity market.
The borrow campaign on the cbETH to WETH loop adds approximately 20 bps to the borrower’s carry. With the cut, the same incentive creates a positive organic margin for the campaign’s participants, and the weETH, wstETH, and wrsETH strategies that receive no incentive move from a marginal or negative organic carry to a positive one. This allows users who prefer other LSTs over cbETH to avoid being squeezed, while still having the option to migrate to cbETH if they wish.
Uoptimal Update
Ethereum Core, Ethereum Lido and Arbitrum already run WETH at a 92% Uoptimal; Base is the only one of the four largest ETH markets still at 90%. Raising Uoptimal adds borrowing capacity and improves the overall capital efficiency of the wETH reserve.
Base now has the broadest user base of any Aave V3 WETH market: 28.5K suppliers and 2.5K borrowers with positions above $10, against 20.3K and 2.0K on Ethereum Core and 17.9K and 1.7K on Arbitrum. The largest wETH supplier holds 14% of the supply, with the top five holding 32%, against 7% and 26% on Ethereum Core, 7% and 15% on Arbitrum, and 55% and 73% on Ethereum Lido, which operates with a 92% Uoptimal configuration. On the debt side, the largest borrower holds 23%, the same share as on Ethereum Core. Supplier concentration on Base has declined in recent months and sits well within the range of markets already operating at 92%.
Share of each Aave V3 WETH market held by its largest supplying and borrowing addresses, balances as of 17 September 2026. Supplier and borrower counts include positions above $10 only.
At the Uoptimal, 8% of supply remains available for withdrawals: 6.8K WETH ($17M) at current supply with 92% utilisation, against 8.5K WETH at 90% utilisation. Over the last twelve months, only three days saw net supply outflows above 6.8K WETH, and two of them (18K WETH on 25 November 2025 and 18K WETH on 19 April 2026) exceed the buffer liquidity in the Reserve. Withdrawals of that relative size are absorbed through utilisation spikes above the Uoptimal, where loan repayments and users exit hastily during periods of market stress. In the last 90 days, utilisation has not exceeded 92%, and it only exceeded 90% during a single week starting 24 August.
With the Base, Slope1 and Uoptimal set at 0%, 2.30% and 92%, the Aave DAO’s revenue in ETH terms increases when utilisation exceeds 86%. At the 90% level the market operated at through early September, the supply APR is 16 bps higher than today and reserve revenue 10% higher; at the new 92% utilisation, the supply APR is 24 bps higher and reserve revenue 15% higher.
| Scenario | Utilization | Borrow APR | Supply APR | Borrowed WETH | Reserve revenue (WETH / yr) |
|---|---|---|---|---|---|
| Current, Slope1 2.50% | 81.4% | 2.26% | 1.56% | 69.3K | 235 |
| Slope1 2.30%, Uoptimal 92%, utilization unchanged | 81.4% | 2.03% | 1.41% | 69.3K | 212 |
| Slope1 2.30%, Uoptimal 92%, breakeven | 85.8% | 2.14% | 1.56% | 73.1K | 235 |
| Slope1 2.30%, Uoptimal 92%, at the previous Uoptimal | 90.0% | 2.25% | 1.72% | 76.7K | 259 |
| Slope1 2.30%, Uoptimal 92%, at Uoptimal | 92.0% | 2.30% | 1.80% | 78.4K | 270 |
Slope2 remains at 8%, in line with Arbitrum, Optimism and Ethereum Lido. With the Uoptimal at 92%, the borrow rate at 95% utilization is 5.3% and at full utilization 10.3%, against 6.5% and 10.5% on the current curve. The spike above the Uoptimal on 24 August, when 10K WETH of supply left the market in a week and the rate briefly reached 4.1%, was withdrawal driven, and the curve above Uoptimal is not changed by this proposal.
Specification
The Risk Stewards will implement the following changes on Aave V3 Base. Both moves sit within the Risk Steward’s single-action limits (100 bps for Slope1, 300 bps for Uoptimal) and can be executed in one update.
| Market | Asset | Parameter | Current | Proposed |
|---|---|---|---|---|
| Base | WETH | Slope1 | 2.50% | 2.30% |
| Base | WETH | Uoptimal | 90% | 92% |
Disclaimer
TokenLogic is an active service provider to the Aave DAO, the beneficiary of stream 100086. The scope of this engagement is available in this forum proposal.
TokenLogic supports and maintains an independent delegate voting platform within the Aave community.
TokenLogic and associated entities have no undisclosed material conflicts of interest at the time of submission.
Next Steps
- Implement the WETH Slope1 reduction to 2.30% and the Uoptimal increase to 92% on Base through the Risk Stewards.
- Track Base WETH utilization, cbETH, weETH and wstETH yields, and the growth of the leveraged strategies over the following weeks.
- Reassess the parameters alongside the other ETH markets as staking yields and utilization evolve.
Copyright
Copyright and related rights waived via CC0.