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Circle Proposes Emergency Rate Changes to Unstick Aave's Frozen USDC Pool

DeFiRegulation & Policy
April 22, 2026
1 min read
Circle Proposes Emergency Rate Changes to Unstick Aave's Frozen USDC Pool

Circle has proposed an emergency overhaul of the interest rate parameters on Aave V3 Ethereum Core's USDC pool, which has been pinned at 99.87% utilization for four days in the wake of the April 18 KelpDAO exploit.

In a governance post published Tuesday, Circle Chief Economist Gordon Liao argued Aave's current interest rate mechanism is failing to clear the market. The pool holds $1.89 billion in supply against $1.89 billion in borrows, with less than $3 million in available liquidity. Borrow rates are flat at the post-kink ceiling of roughly 14%, and the pool has contracted about $60 million in the last 24 hours as repayments are matched dollar-for-dollar by queued withdrawals.

Liao's proposal would raise the pool's Slope 2 parameter for USDC deposits interest rate, from roughly 10% to 40% immediately, via a Risk Steward action. That would be followed by governance ratification of a 50% target within five to seven days.

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RELATED TOPICS

circleaave v3usdc poolinterest rate adjustmentliquidity managementdecentralized financeexploit responseinterest rate parametersdefi governancerisk mitigation

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