Circle's Chief Economist proposes increasing the borrowing interest rate for USDC on Aave to alleviate liquidity stress

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Mars Finance News, Circle Chief Economist Gordon Liao submitted a governance proposal for Aave, recommending adjustments to the USDC interest rate parameters in the Aave v3 Ethereum core markets to address the high utilization and liquidity crunch that persisted for several days following the KelpDAO rsETH incident. The proposal suggests raising “Slope 2” first to 40%, aiming for 50%, while also lowering the optimal utilization rate to attract more USDC deposits. Some Aave community members believe that higher borrowing costs could exacerbate borrower liquidation risks. Data shows that Aave’s total value locked is currently approximately $15.3 billion.

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