$AAVE’s WETH core move is exposing a liquidity trap ⚠️
Spark’s strategy lead is arguing that Aave’s decision to unlock the WETH core market on Ethereum mostly rewards loop lenders rather than protecting users. The concern is that a 5.15% core borrow rate versus higher LST/LRT yields can attract aggressive leverage, keep utilization near 100%, and tighten conditions for aWETH holders.
When utilization stays pinned, the market stops breathing normally. That’s where the smart money usually shows its hand: fast capital keeps looping the spread while everyone else gets squeezed by thin exits and expensive refinancing. If this friction persists, the real story is whether whales are willing to keep the flywheel spinning or force a repricing of risk.
Not financial advice. Manage your risk and protect your capital.
#Aave #DeFi #Crypto #Ethereum #YieldFarming
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