TechFlow, July 23 — According to on-chain analyst Ai Auntie (@ai_9684xtpa), citing analysis from crypto blogger darkpool, the recent batch withdrawal of 620,000 ETH may be linked to a sharp spike in borrowing rates on Aave caused by large-scale withdrawals of ETH deposits. The sudden mass withdrawal of ETH deposits on Aave led to soaring borrowing rates, turning profitable arbitrage positions into losses for leveraged yield loopers, who were then forced to redeem stETH to deleverage, resulting in the current situation.
- Aave's ETH borrowing APR briefly surged to 10%
- Lido's $stETH withdrawal waiting period has now been extended to 21 days (normally within one week)
- On-chain stETH-to-ETH exchange still trades at a discount of nearly 0.4%
Regarding the mechanics of looping strategies: Aave's collateral ratio for ETH is 93%, allowing arbitrageurs to leverage up to 14x to capture interest rate differentials, yielding an annualized return of ~7% on principal under normal conditions.
Earlier report: ETH pending unstaking reaches 620,000 ETH, with net redemptions at approximately 271,000 ETH.
