Last week, major Ethereum holders withdrew $1.7 billion from the DeFi protocol Aave, significantly reducing available liquidity and temporarily increasing interest rates on the platform.
Withdrawal of Ethereum from Aave
According to DefiLlama data, Aave is the largest lending protocol on Ethereum, with over $55 billion in deposits. Users can deposit assets like Ethereum and earn interest when other users borrow them.
Justin Sun's Involvement
Marc Zeller, an Aave contributor, suggested that crypto billionaire Justin Sun is behind most Ethereum withdrawals. "He’s moving billions like I go grocery shopping," he stated.
Market Impact
After the Ethereum withdrawals from Aave, the available amount of the asset on the site decreased, leading to an increase in interest rates charged to borrowers. This resulted in losses for strategies that relied on low rates. Additionally, according to Farside Investors, $5 billion has been invested in nine Ethereum funds since mid-May, but a slight correction has been observed in the crypto market due to various macroeconomic factors.
The mass withdrawal of Ethereum from Aave has impacted interest rates and contributed to a short-term correction in the market. These events highlight the volatility of the cryptocurrency market and the influence of large players in the sector.
