TechFlow reports that on April 21, MonetSupply, Strategy Lead at Spark, tweeted that Aave has decided to unfreeze the Ethereum Core WETH market. However, MonetSupply believes that under current conditions and with the existing interest rate model configuration, this move may enable LST/LRT holders to establish high-yield recursive leveraged positions, while keeping the aEthWETH pair perpetually illiquid for withdrawal users. Using weETH as an example, MonetSupply noted that if weETH’s current ~0.5% discount reverts to parity within one month, the implied yield would be approximately 6%; adding base staking yields brings the total to roughly 8%. Meanwhile, Aave’s Core ETH borrowing rate cap stands at 5.15%, enabling an additional ~2.85% return per cycle, with potential maximum returns reaching ~45%. MonetSupply also warned that this strategy could further degrade the user experience for aWETH holders and stablecoin borrowers.
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