Crypto: Aave Tightens USDT Borrowing Rules to Safeguard Liquidity

Aave has just changed the borrowing conditions of USDT on its Ethereum V3 Core crypto market. Since October 21, rates increase faster as soon as 92% of liquidity is borrowed, compared to 94% previously. At a utilization level of 94%, the theoretical rate thus goes from 4.5% to 7%. The decentralized finance protocol aims to preserve more funds available for withdrawals. The change took effect on October 21, at Ethereum block 26,241,799. Aave regularly adjusts the parameters of its markets to control risks. In July, the protocol had already considered removing several crypto reserves that had become unprofitable . This time, the changes directly affect users who borrow USDT. The mechanism remains quite simple. On Aave, the borrowing rate depends on the proportion of deposits already used by borrowers.

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