USDe leaves Aave: $246M withdrawn in a week

Why USDe is leaving Aave

USDe deposits on Aave v3 (Ethereum) went from $538M on October 4 to $292M on October 11: $246M withdrawn, 46% of deposits, in seven days. Most of it left between October 6 and 9.

Two changes came before this move. On September 28, Aave's risk stewards proposed lowering the USDe supply cap from 902 to 700 million; on October 12, Aave's API shows it at 550 million, still above deposits. Above all, Ethena ended the token incentives tied to USDe at the end of the month. Without them, a USDe deposit on Aave pays 0.21% on average over the week: the data suggests these deposits followed the incentives more than the rate.

The same move shows elsewhere. On Solana, the USDe deposited in Kamino's Ethena market falls by 25%; Kamino has published no cause, and the end of Ethena's incentives is only a lead. The supply of USDe itself shrinks by $0.2B over the week.

Where the money goes

Among the 99 stablecoin yield products open to anyone and above $50M, sUSDS (Sky) draws the most deposits: +$351M in seven days, after its savings rate rose from 3.60% to 3.80% on October 7. Next come Spark's USDT savings (+$286M, 64% more) and Jupiter Lend's PYUSD on Solana (+$151M), a market opened on September 30. On the withdrawal side, after Aave's USDe come Morpho's Steakhouse Prime USDC vault on Base (−$144M, −41%), Jupiter Lend's USDG (−$92M) and Maple's syrupUSDC (−$92M, 3% of its deposits).

Two of these moves match transfers between products. At Jupiter Lend, the Bitwise x Ethena market is winding down, and the PYUSD market curated by Sentora is the designated destination of its USDe loops: the PYUSD inflow and the USDG outflow are consistent with this migration, which Jupiter has not quantified. At Morpho, from September 28 to October 10, the same address withdrew from Steakhouse Prime USDC every day and deposited into the Grove x Steakhouse USDC vault in the same transaction, most often $20M at a time: a move between two Steakhouse vaults, not an exit from Morpho. Grove announced a migration of this kind, at most 20 million USDC a day; the origin vault its post names is another one, so the link remains unverified.

Across the market, the supply of dollar stablecoins falls by $0.5B, to $313.2B: USDC loses $1.1B and USDe $0.2B, while USDS gains $0.4B, and USDD and USDT $0.2B each.

The risk radar

The radar keeps the thresholds crossed this week. Three products lost more than 40% of their deposits in seven days: Aave's USDe, Morpho's Steakhouse Prime USDC vault on Base and Jupiter Lend's USDG (−61%). The last two match the transfers described above: a fast exit is not a failure in itself, and a yield can move with a large depositor.

Aave v3's USDC market on Ethereum is 94.3% utilized, just above its optimal rate of 94%: beyond it, the borrow rate climbs fast, and only $137M can be withdrawn right away out of $2.4B deposited. On October 8, it was at 96.7% and its deposit rate rose to 8.08% for a few hours. The same threshold is crossed on Plasma, where Aave's USDT0 market is 94.1% utilized ($47M available out of $795M). Finally, Falcon's USDf ($1.7B in circulation) trades at $0.995, 0.5% off its peg.

What moved, and why

Yields move little from one week to the next; this week again, the largest rises come from USDC lending. Fluid goes from 4.75% to 6.16% on Ethereum and from 4.96% to 5.47% on Arbitrum, Jupiter Lend from 4.09% to 4.91% on Solana: USDC remains in demand from borrowers, as the utilization of Aave's market shows. The fxUSD stability pool (f(x) Protocol) rises from 6.62% to 7.51%.

On the way down, Sentora's PYUSD products fall from 6.47% to 5.55% on Morpho (PYUSD Main) and from 7.65% to 6.38% on Solana: more than a third of their yield is paid in rewards, whose amount varies from week to week. Morpho's Steakhouse USDT vault falls from 3.42% to 2.73%, while Aave's USDT market is 90.4% utilized, below its optimal rate.

The newcomers

Jupiter Lend's PYUSD on Solana gathered $251M in twelve days, at 3.62% on average over the week: it is the market that takes over the USDe loops described above. A Morpho vault (SXSRLUSD) holds $250M after 26 days, at 0.15%; we have not found any communication from its curator so far. A recent product has little history: its yield in the first weeks says little about what it will pay next.

What changes in the protocols

• Ethena ends the token incentives tied to USDe. Announced on September 26 for the end of the month. The sUSDe yield now rests on protocol revenue alone: 4.97% on average over the week, against 5.14% the week before. Source: Ethena on X
• Aave reduces its exposure to USDe. On September 28, Aave's risk stewards proposed lowering the USDe supply cap on Aave v3 Core from 902 to 700 million, its borrow cap from 100 to 50 million and the sUSDe cap from 250 to 175 million, raising the USDe base borrow rate from 6.30% to 6.60% and the USDT optimal utilization from 93% to 94%. On October 12, Aave's API shows the borrow cap at 50 million, the sUSDe cap at 175 million and the USDT optimal utilization at 94%, as proposed, and the USDe supply cap at 550 million, lower still. Source: Aave governance forum
• Jupiter Lend moves its USDe loops to a new market. The Bitwise x Ethena market is winding down, and borrowing USDG there is suspended. The market curated by Sentora, opened on September 30, takes over its USDe loops, financed in PYUSD. The date by which positions must be closed is not set yet. Source: Jupiter documentation
• Sky raises the sUSDS savings rate to 3.80%. On October 7, update no. 33 of the SP-BEAM mechanism took the Sky savings rate from 3.60% to 3.80%, and raised the stability fees of the main vaults, on the borrowing side. Source: Sky forum
• The GHO borrow rate moves to 4.50% on Aave v3 Core. Proposed on October 2 by the GHO Stewards, the increase from 4.25% to 4.50% puts it in line with the GHO savings rate; Aave's API shows it in force on October 12. Source: Aave governance forum

The benchmark: the reference basket

The Patrima reference basket brings together eleven of the most used products, in five families: savings, lending, credit, synthetic dollars and rewards. It pays 5.15% on average over seven days, against 5.02% the week before and 4.25% at its summer low, on July 18. For $100,000 split equally, this comes to about $429 a month at this week's yield, before fees.