đŠ AAVEâS $50M LENDING PLAN HAS A HIDDEN RISK..
Aaveâs proposed institutional lending setup is interesting because the risk doesnât necessarily require a borrower to default.
The structure would use BTC or ETH held in custody as borrower collateral, while separate DAO assets would support the stablecoin funding side.
That creates an important question: what happens if crypto prices fall sharply?
Even if borrowers continue making payments, a broader market decline could put pressure on both collateral and the assets backing the funding.
The proposed 6%â8% loan rates also arenât guaranteed profit. If funding costs rise faster than loan rates can be repriced, the interest spread could get squeezed.
According to the proposal details, repricing may require around 90 daysâ notice, which creates another layer of rate risk.
For me, the interesting part isnât simply whether borrowers default. Itâs whether the structure can maintain a healthy spread through a volatile crypto cycle.
Approval and actual drawdowns have not been reported yet.
$US $AGT $SOON
#AAVE #DeFi #Crypto #Ethereum #bitcoin
Aaveâs proposed institutional lending setup is interesting because the risk doesnât necessarily require a borrower to default.
The structure would use BTC or ETH held in custody as borrower collateral, while separate DAO assets would support the stablecoin funding side.
That creates an important question: what happens if crypto prices fall sharply?
Even if borrowers continue making payments, a broader market decline could put pressure on both collateral and the assets backing the funding.
The proposed 6%â8% loan rates also arenât guaranteed profit. If funding costs rise faster than loan rates can be repriced, the interest spread could get squeezed.
According to the proposal details, repricing may require around 90 daysâ notice, which creates another layer of rate risk.
For me, the interesting part isnât simply whether borrowers default. Itâs whether the structure can maintain a healthy spread through a volatile crypto cycle.
Approval and actual drawdowns have not been reported yet.
$US $AGT $SOON
#AAVE #DeFi #Crypto #Ethereum #bitcoin
