A huge $ 1.7 billion in ETH was removed from Aave in last week. The members of the Aave community believe that the founder of Tron, Justin Sun, withdrew at least 600 million dollars, causing a cascade of reactions on the market.
The big outing has led to a sharp drop in ETH’s liquidity on Aave.
The movement of Ethereum whales causes a sharp drop in Seth
The release of the continuous whales on Aave pushed higher use rates, which caused an increase in borrowing rates of the ETH.
As the loan became expensive, users DEFI who relied on use strategies began to relax the positions.
One of the hardest affected strategies was the popular lever of Steth / ETH lever. The graphics show that Seth Price went from $ 2,800 to $ 2,200 in a straight line on July 14.
Users generally deposit ETH, borrow against, buy Steth and repeat the cycle to win stimulation yields. However, higher borrowing rates and a weakening Steth Peg have made the strategy not profitable.
While the loopers started to go out, many rushed to exchange Steth for Eth. This created congestion in the queue of removal of puncture, which currently takes about 18 days to be treated.
To avoid waiting, some users discharged Steth on the secondary markets, causing a debt of approximately 0.3%.
This light Depeg presents major risks for leverage traders. A price difference of 0.3% can mean a loss of 3% on a 10x lever effect, forcing a lot to undergo losses or to wait for illiquid positions.
The situation can worsen if the interest continues to accumulate, which can trigger liquidations.
Price graphics reflect stress. ETH increased more than 8% in last week to $ 3,593, but has since fallen from its peak.
Meanwhile, Seth – Synthetic Ethn ethnut emitted by Synthetix – jumped 30.5% over the week, signaling the demand for alternatives in the midst of volatility.
The event highlights systemic fragility in DEFI. A single significant withdrawal has disrupted loan rates, broke popular strategies and has exposed its dependence on oracles and delayed redemption mechanisms.
With many Steth oracles still using buyout rates, not market rates, lenders remain stuck when the PEG drifts.
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