Analysis: The Mass Unstaking of 620,000 ETH May Be Linked to Large Withdrawals of ETH Deposits on Aave, Leading to a Surge in Borrowing Rates

According to ChainCatcher, citing on-chain analyst @ai_9684xtpa and crypto KOL darkpool’s analysis, the mass unstaking event involving 620,000 ETH may be related to a surge in ETH withdrawals from the Aave platform, which caused borrowing rates to spike. The rapid withdrawal of ETH deposits from Aave led to soaring borrowing rates, forcing loop lending participants—who had previously profited from interest rate spreads—into losses, compelling them to redeem stETH to deleverage, resulting in the current situation.

• Aave ETH borrowing APR once soared to 10%
• Lido $stETH’s current exit waiting period has been extended to 21 days (normally within a week)
• There is still a discount of nearly 0.4% when swapping stETH for ETH on-chain

Regarding the implementation of loop lending, Aave’s collateral ratio for ETH is 93%, meaning arbitrageurs can use leverage of up to 14x to earn interest rate spreads. Under normal circumstances, the annualized return on principal can reach approximately 7%.