Aave has carried out a second round of stablecoin interest rate model adjustments through its Risk Steward process, following an initial execution on August 27. The latest step increases Slope1 by 20 basis points across the reserves covered, which is twice the size of the first round as utilization rises in the affected markets.

The proposal gives particular attention to USDe, where the changes are intended to reduce what it describes as subsidized borrowing and align borrowing costs more closely with Ethena’s staking yield. According to the post, the adjustment is designed to favor longer-term market health even if some existing borrow demand falls away.

Why the USDe change is being made

The governance post argues that USDe borrowing below the staking rate creates a transfer away from existing holders. Ethena says rewards are not limited to staked USDe alone: nearly all USDe is held through channels that qualify for rewards, representing about $4.1 billion in total. Of that amount, around $1.3 billion is staked in sUSDe, $1.2 billion is supplied on Aave, and most of the remainder is held on partner platforms offering Ethena-funded earn programs.

Ethena says its rewards are funded by the yield generated from the backing portfolio, currently around 5%. When USDe is borrowed, the one-to-one relationship between rewarded balances and backing can break. The post says that if borrowed USDe is staked, the same backing ends up funding rewards on both the supplied balance and the staked tokens. If borrowed USDe is sold and later redeemed, rewards still continue to accrue on deposits even though the backing has left. In both cases, Ethena says it is effectively paying rewards on the full $0.64 billion of borrowed USDe, with supplier borrow income providing only a partial offset.

Estimated financial impact

At the pre-change borrowing rates and with a current staking rate of 4.8%, the post estimates the resulting loss at roughly $19 million per year. It says the repricing is intended to recover that amount and redistribute it across about $3.9 billion of supply that continues to earn rewards.

Based on that calculation, the expected staking rate would rise by roughly 50 basis points, moving from 4.8% to 5.3%. The post presents this as the rationale for aligning USDe borrow costs with the staking rate: borrowing below that level is described as a net loss for Ethena stakers because the spread is effectively funded by rewards that would otherwise go to current holders.

Migration path for existing borrowers

For borrowers already using USDe debt, the post points to debt swaps as the preferred adjustment route. Rather than closing positions, users can migrate liabilities from USDe into USDC or USDT while leaving collateral in place. The same mechanism is highlighted for Plasma, where positions backed by PT-sUSDe cannot be exited by selling collateral before maturity.

A debt migration from USDe to USDT0 on Plasma would similarly leave collateral untouched. The post adds that Plasma USDT0 is included both in the Slope1 adjustment set and in a temporary uOptimal increase intended to draw in additional supply and make room for migrated debt. Across the broader program, Aave says the temporary uOptimal increase creates about $116 million in extra borrowing capacity on the reserves expected to absorb these migrated positions.

What comes next

The base adjustment sequence is described as moving in 100 basis point steps, which the post says is meant to leave time for debt migrations as repricing continues. Aave also notes that the relevant v4 reserves will be updated after Risk Stewards are deployed on v4.

Further specifications for the next rounds are expected to be published as the process continues. For now, the second-round change marks a faster pace than the first execution, reflecting what the post describes as accelerating market conditions and higher utilization across the reserves in scope.

Source: governance.aave.com