Aave USDC liquidity pool is nearing full capacity; the proposal plans to significantly increase the interest rate parameters to alleviate liquidity pressure.

Wu Shuo learned that Circle Chief Economist Gordon Liao submitted an ARFC proposal stating that the Aave v3 Ethereum mainnet USDC liquidity pool has been approaching 100% utilization for about four consecutive days, with borrowing rates maintained around the 14% cap but unable to clear the market. Liquidity remains tight, and both lending and borrowing scales are shrinking, mainly driven by approximately $300 million in borrowing demand following the rsETH incident and the borrower’s insensitivity to interest rates. The proposal suggests increasing Slope 2 from about 10% to 50% (intermediate transition to 40%), and lowering the optimal utilization rate from 92% to 85% to raise the interest rate ceiling and attract liquidity back, allowing the liquidity pool to restore market clearing through price mechanisms. It also recommends temporarily pausing or fixing Slope 2 risk oracles during abnormal periods, with LlamaRisk and Aave Labs executing temporary parameters first and completing governance approval within 5 to 7 days.