TechFlow News: On April 20, Monetsupply.eth, Spark’s Head of Strategy, stated on X that Spark has long maintained relatively high borrowing rate caps for its SparkLend ETH market. Although this policy drove many users to Aave—resulting in significant loss of business and revenue—the current market liquidity crisis has validated Spark’s prudence. Presently, Aave is experiencing severe liquidity shortages across multiple chains—including Ethereum Mainnet, Arbitrum, Plasma, Mantle, and Base—with ETH borrowing utilization hitting 100%. This has prevented depositors from withdrawing funds and hindered normal liquidation of ETH collateral. Monetsupply.eth warned that if the current liquidity crunch persists, a 15–20% drop in ETH’s price could trigger widespread bad debt on Aave—potentially exacerbated by the rsETH vulnerability incident.
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