Aave adjusts USDT borrowing parameters on Ethereum

Aave has implemented changes to its USDT borrowing rules on the Ethereum Core market, lowering the utilization threshold at which borrowing rates increase sharply. The utilization kink was reduced from 94% to 92%, meaning borrowing costs rise more aggressively as pool liquidity tightens.

This adjustment, based on recommendations from risk service provider LlamaRisk, aims to provide lenders with earlier withdrawal headroom by increasing pressure on borrowers to preserve liquidity. Under the new two-slope model, the rate at the 92% kink is set at 4.5% APR, rising to 14.5% at full utilization.

Historical data indicates that most DeFi lending rate spikes are temporary, with approximately 68% of stablecoin rate jumps on Aave V3 and Compound V3 reverting to baseline within 72 hours. However, structural spikes driven by sustained borrowing demand can last for weeks. For example, a period in late 2024 saw rates remain elevated for 31 days because utilization stayed above 90%.