Report: Recent big dump in the crypto market puts $1 billion sUSDe circular trading at risk.

PANews October 29 news, according to CoinDesk report, Sentora Research states that after the big dump in the crypto market on October 11, nearly $1 billion DeFi positions involving Ethena stake of USDe (sUSDe) are at risk. The big dump caused a significant drop in interest rates in the DeFi market, and the returns on leveraged strategies such as sUSDe circular trading have shrunk. In Aave v3 core version, the borrowing interest rates for USDT/USDC are approximately 2.0% and 1.5% higher than the returns of sUSDe, respectively. Users leveraging stablecoins to go long on sUSDe are facing negative returns, and circular positions borrowing stablecoins to buy sUSDe are starting to incur losses. If this situation persists, approximately $1 billion in positions exposed to negative interest spreads in Aave v3 core version may be closed. Negative interest rate spreads may force collateral liquidation or deleveraging, weakening liquidity in trading venues and triggering a chain reaction. Sentora reminds traders to pay attention to the interest rate spread between Aave's annualized yield and the yield of sUSDe, especially when it remains negative, as well as the utilization rates of USDT and USDC lending pools. Currently, an increasing number of cyclical positions are approaching liquidation, and in the future, traders should monitor the surge in utilization rates of USDT and USDC lending pools, which may raise borrowing costs and exacerbate market pressure when the interest rate spread is negative.