The world’s largest lending system, Spirithe is currently dealing with the “banking” situation. On the Ethereum mainnet, the use of two main currencies, USDC and usdt hung on 100%. This means that every dollar held in these pools is being borrowed, leaving the “funds available” at zero and borrowers unable to repay their assets.
Why can’t I leave Aave?
If you are trying to withdraw USDC or USDT from Aave and receiving errors, that is why utilization has reached 100%. In DeFi lending, you can only repay if there is “empty” capital in the pool. When all the money is used by borrowers, borrowers have to wait for someone else to repay their loan or for new deposits to come in. This is a constant money trap, which is exacerbated by new interest rates.
The ‘Slow Burn’ & Slope2 Risk Oracle
To understand why this problem persists, we need to look Slope2 Risk Oracle. Historically, Aave used a “kinked” interest rate. When utilization exceeds a certain threshold (eg, 90%), the interest rate immediately increases to 80% + APY forcing borrowers to repay.
New Slow Roasting machine, operated by Aave Generalized Risk Steward (AGRS)change this. Instead of rising instantaneously, the Slope2 component rises more slowly than a 24 to 72 hour window. Today, most of these prices are going down a bit 10-12% during the first phase of the upgrade.
What Happened to DeFi Users: Lenders Cold, Attackers Protected
“Slow Burn” is designed to prevent static “flash” output, but in the worst case, it creates a large power imbalance:
- For Borrowers: A borrower or lender with hundreds of loans pays a “cheap” interest rate (12%) to get the loan closed.
- For Borrowers: Users are not charged for the accident. Even though their money is frozen, they are getting a share of the market “risk premium” because oracle avoids the necessary hit of 80% + forced return.
Institutional Flight: The $8B Deposit Exodus
The lack of immediate cash has led to a serious loss of confidence. The data shows the estimate $ 8 billion of deposit aircraft from nature. Great players love it Abraxas Capital and users exchange as MEXC has moved aggressively to pull the load. Those who haven’t exited before the 100% mark are locked in, watching “Slow Burn” play in slow motion.
Technical structure: How Slope2 Math works
In technical terms, Variable Borrow Rate (Rt) is calculated using the following principles:
In this problem, a River2 price is no longer a fixed value but a dynamic variable that rises gradually. This “wait and see” approach created by the protocol has turned what should have been a one-hour challenge into a multi-day challenge.
What will happen to DeFi Users?
In the meantime, retail borrowers in the USDC and USDT pools must wait for the “Slow Burn” to eventually reach a punitive level – perhaps above 50% – to force borrowers to return the money. This event will serve as a warning about the trade-off between “smooth” interest rate curves and the power of protocol agility in dark situations.
