Aave lowers USDT borrowing threshold on Ethereum, loan costs rise sooner

Aave has reduced the utilization threshold for Tether's USDT on its Ethereum market from 94% to 92%, causing borrowing rates to rise more sharply at lower liquidity levels. According to DeFi risk service LlamaRisk, this shift models an additional 57.8 million USDT of unborrowed liquidity. The change moves the 'kink' point on Aave's interest rate curve earlier, meaning borrowers face higher rates sooner as pool liquidity tightens.