Analysis: The batch unstaking event of 620,000 ETH may be related to the large withdrawals of ETH deposits on the Aave platform, causing borrowing rates to soar

ChainCatcher news, according to on-chain analyst @ai_9684xtpa citing crypto KOL darkpool's analysis, the batch unstaking event of 620,000 ETH may be related to the massive withdrawal of ETH deposits from the Aave platform, which caused borrowing rates to soar. The large withdrawals of Aave ETH deposits in a short period led to skyrocketing borrowing rates, forcing loop players who were initially profiting from the interest rate spread to incur losses, and they were compelled 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 nearly 0.4% discount for on-chain stETH to ETH exchange

Regarding the implementation of loop lending, Aave's collateralization rate for ETH is 93%, meaning that arbitrage players can even use up to 14 times leverage to gain interest rate spread profits, with an annualized return on principal reaching approximately ~7% under normal circumstances.