Aave Proposal: Significantly Increase USDC Slope 2 to 50% to Alleviate Liquidity Crisis

Deep Tide TechFlow News, April 23, According to the Aave Governance Forum, Circle member GordonLiao submitted an ARFC proposal recommending a two-step adjustment to the USDC interest rate model parameters on Aave v3 Ethereum Core to address the current liquidity depletion issue in the pool.

Current background: Influenced by the rsETH incident on April 18, the USDC pool utilization rate has remained close to 100%, with available liquidity less than $3 million, lending rates locked at the 14% cap for a long time, and the total supply in the pool shrinking by approximately $60 million over the past 24 hours. The market cannot clear through price mechanisms.

The core content of the proposal is as follows:

Step 1 (immediate execution by risk administrators): Increase Slope 2 from 10% to 40%, reduce the optimal utilization rate from 92% to 87%, and pause the USDC Slope 2 risk oracle.

Step 2 (governance voting to be completed within 5-7 days): Further increase Slope 2 to 50%, and reduce the optimal utilization rate to 85%.

The proposal believes that currently many borrowers are insensitive to interest rates, mainly borrowing to bypass withdrawal queues and exit positions, with active leverage attracting new suppliers. Raising the maximum supply interest rate to the 40%-50% range is expected to attract USDC inflows within hours, lowering utilization below the kink point and restoring normal market clearing functions. Additionally, the proposal suggests pausing the Slope 2 risk oracle developed by Chaos Labs because this oracle responded slowly during past stress events, and Chaos Labs officially exited the Aave ecosystem on April 6, with future maintenance being uncertain.