Circle Proposes to Increase USDC Maximum Deposit Rate to 48.2% on Aave Forum

Odaily News Circle's Chief Economist, Gordon Liao, has initiated a proposal on the Aave governance forum, suggesting an urgent adjustment to the USDC interest rate parameters in the Aave V3 Ethereum main pool. This aims to address the situation where the pool's utilization rate has remained at an extremely high level of 99.87% for four consecutive days following the KelpDAO attack incident.

Liao stated that Aave's current interest rate mechanism has failed to effectively "clear" the market. The pool currently has a supply size of $1.89 billion, with borrowing also at $1.89 billion, leaving available liquidity under $3 million. The borrowing rate remains at the upper limit (approximately 14%) after the inflection point. Furthermore, over the past 24 hours, the pool size has shrunk by about $60 million — because repayment funds are being used sequentially to meet queued withdrawal demands. Therefore, the Slope 2 parameter in the USDC deposit rate curve should be immediately increased from approximately 10% to 40% via the Risk Steward mechanism, with a governance vote to confirm a further increase to 50% within 5 to 7 days. Concurrently, the Optimal Utilization will be reduced from 92% to 87% during the transition phase and further down to 85% upon final confirmation.

According to Liao's proposal, under the new parameter settings, when the utilization rate reaches 100%, the maximum USDC deposit rate will increase from approximately 12.6% to 48.2%.