Aave Adjusts USDT Lending Rules and Increases Borrowing Costs

The Aave protocol implemented a technical change to the lending rates for the USDT asset. The update took place at block 26,241,799 on the Ethereum network on October 21.

The change lowered the optimal utilization limit from 94% to 92%. This adjustment forces interest rates to rise more rapidly when pool liquidity decreases.

The measure aims to create a larger buffer for capital withdrawals. Although costs have increased, the model does not prohibit borrowing above the newly defined threshold.

The current calculation sets a rate of 4.5% upon reaching the new 92% limit. If utilization hits 100%, the borrowing cost can reach 14.5% per year.

Aave's two-stage structure applies gradual interest until the inflection point. After this level, the cost curve becomes steeper to discourage total pool depletion.

The adjustment does not guarantee immediate liquidity for withdrawals in all scenarios. Cash availability for lenders remains dependent on borrower behavior.