AAVE V2 USDT+USDC Liquidity vs FED Fund Rate
2 Significant drop in liquidity post Terra & FTX
Sep 2022:
- FED raises 75bps from 2.33% to 3.08%
- USDT & USDC liquidity dropped by $1B (-55%)
Jul 2023:
- FED raises 25bps from 5.08% to 5.33%
- USDT & USDC liquidity dropped by $380M (-33%)
Stablecoin rates in DeFi became less attractive from a risk and reward perspective as they were also offering a similar rate.
With the recent bullish sentiment in crypto, the demand for leverage has spiked, which could increase the supply and borrowing rate.
Let's see if the stablecoin liquidity and supply rate in lending protocols will go back up