An address identified as 0x540C withdrew $114.9 million in USDT from the Aave protocol on November 6, 2025, pushing the asset's utilization rate to 92.83%, well above the optimal threshold of 90%. This large-scale withdrawal immediately triggered an automatic interest rate spike as the protocol's built-in mechanism activated to encourage new deposits and discourage additional borrowing, aiming to prevent illiquidity.
The event, first detected by Lookonchain, has sparked concerns over potential liquidity shortages in major stablecoin markets, with discussions ongoing in community forums like Telegram and Reddit about measures to mitigate future stress. A similar incident occurred in March 2023 with Aave's DAI market, where utilization hit 100%, underscoring structural risks from capital concentration by whales.
Broader implications include potential pressure on liquidity in related markets such as USDC and DAI, with analysts warning that such utilization spikes can distort benchmark rates across the DeFi ecosystem. Despite Aave's overall health—with over $32 billion in total value locked and $21.7 billion in outstanding loans—the AAVE token fell to a one-month low, trading around $194 after a roughly 30% decline, unaffected by promised buyback programs.
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