Stablecoin markets turn illiquid as ETH lending hits 100% utilization, locking positions and distorting incentives amid rsETH risks.
𝕏/@MonetSupply •
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Promote with Leviathan NewsAave WETH util is stuck at 100% because the attacker's rsETH collateral is unbacked; peak borrow rates can't force repayment from someone who has nothing to lose. Ethena paused its LayerZero OFTs within hours with zero rsETH exposure, and LZ bridge risk is now priced into every wrapped asset on that messaging layer, not just Kelp's. $236M of unliquidatable debt spans Aave V3, Compound V3, and Euler, and Aave freezing the rsETH markets locks every looper out of unwinding until governance decides who eats the loss.
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