ETH Reddit Mentions | ChartExchange

I'm going to give a different answer to most here, I think this one might last. Previously what has happened is that the Aave DAO (or Chaos Labs) has stepped in to 'fix' the rates by changing the curve so that the kink was higher up in terms of utilization.
We had a large spike a couple of weeks back where there was a little bit of panic on Twitter as it hit around 12%, give or take, and then a couple of days later people declared it to be fixed. Nothing actually changed in terms of deposits and withdrawals though it was just that the curve was changed to avoid any negative scenarios for borrowers.
Here the utilization is at 99.82%. I've actually never seen it that high and I also don't really know what it means in terms of flows any more, I don't have a read on what it means in terms of market impact.
**What I can say pretty clearly** though is that if you have a large amount of ETH on Aave you can no longer withdraw it. You literally need to wait until someone deposits ETH before you can withdraw. **All the deposited ETH on Aave is being borrowed.**
I don't mean this in an alarming way because I trust Aave wholeheartedly but I have only ever seen this happen when a lending market fails, in all my years doing DeFi. I'm not saying Aave is failing, it isn't, but the last time I saw this was on Euler V1 when everyone max borrowed everything they could before the hacker could withdraw.
What we're seeing here is different and there's two ways of reading it:
1. The demand to borrow ETH is high, either because people are borrowing ETH to short it or they want to get all ETH off the market in a hurry.
2. The desire to supply ETH is low, either because they want to or have already sold it into this 'pump' to $2100, or they no longer want to borrow against it.
I'm not panicking but I'd be closing any leveraged wstETH/ETH loops because the longer we stay at full utilisation the more demand there will be from depositors to get out. Basically if you're supplying ETH on Aave at size you're now trapped in that market until fresh supply enters, that causes a bit of unrest and a queue for ETH to leave quickly as it arrives.
It might be a while before the rates come down and Aave DAO/Chaos is in a tough position of either waiting for more supply at these relatively low rates (in terms of current utilization) or to instead *increase* rates to encourage more supply at the risk of borrower pain.
I wrote about this behaviour 12d ago here: [https://www.reddit.com/r/ethereum/comments/1quk1p6/comment/o3bwe66/?context=3](https://www.reddit.com/r/ethereum/comments/1quk1p6/comment/o3bwe66/?context=3)

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