Spark Strategic Director: The ETH market faces liquidity risk due to a potential 10% to 15% reduction caused by RsETH loans

Mars Finance reports that Spark’s strategic director monetsupply.eth posted on the X platform stating that as the stablecoin market begins to lack liquidity, the situation is entering a more dangerous phase. I believe that approximately 16.5% of the ETH market is backed by rsETH, and if loans supported by rsETH incur losses on both the mainnet and external chains, there could be a 10% to 15% reduction in emode, with the remaining 2% to 3% reduction left for ETH providers to offset the umbrella structure. ETH providers naturally tend to exit quickly to avoid this risk, so utilization is locked at 100%, and lending rates are insufficient to incentivize repayment of unrelated LST cycles (wstETH, weETH) to release liquidity. Since ETH cannot be withdrawn, users who borrow stablecoins like USDT and collateralize with ETH cannot liquidate even when stablecoin borrowing rates rise, cutting off the typical incentives for maintaining market health. Currently, two unhealthy incentives have emerged, causing market utilization to be locked at 100%: 1) ETH holders cannot liquidate to maintain healthy LTV, and liquidators cannot atomically extract or sell collateral, which could lead to bad debt if ETHUSD prices fall. 2) Users supplying USDT to exit holdings tend to maximize borrowing of other stablecoins, and this position is currently generating positive returns (for now), making exit costs low; if conditions worsen, at least 75% of the position value can be recovered. The bottom line is that for these pooled/re-staked lending markets to operate normally, liquidity must be maintained at all costs. Recently, the weakening of slope2’s maximum lending rate on Aave has had a negative impact and significantly increased the risk of a market failure.