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Aave's $4.7 billion exposure may lead to liquidity tightness, Chaos Labs issues a warning.
According to HashKey News, Chaos Labs warns that as Ethena deposits a large amount of USDe into Aave, it may threaten Aave's risk resistance capability and trigger liquidity tension. Currently, Ethena has deposited $580 million of USDe-backed assets into Aave. This strategy is known as re-collateralization, and Aave's current $4.7 billion exposure comes from USDe-backed assets, accounting for over 45% of the total USDe supply. Chaos Labs points out that since the collateral assets also serve as Aave's return capital and liquidity, it increases potential vulnerabilities, which may exacerbate pressure on both protocols during deleveraging events. Although there are currently no immediate reasons for concern, the cyclical strategy of the collateral assets may trigger liquidity tension in Aave, rising borrowing rates, and on-chain reactions.
$AAVE #Aave # ChaosLabs #Blockchain # USDe #LiquidityRisk