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USDT Liquidity Crisis on Aave: HTX Withdrawal Sparks 40% Rate Surge

USDT Liquidity Crisis on Aave: HTX Withdrawal Sparks 40% Rate Surge

Author:
USDT News
Published:
2025-06-05 12:44:19
22
3
[TRADE_PLUGIN]BTCUSDT,BTCUSDT[/TRADE_PLUGIN]

On June 5, 2025, Aave's USDT liquidity pool experienced a dramatic liquidity crunch after HTX (formerly Huobi) withdrew $400 million—93% of the available supply—in a single transaction. This sudden move caused utilization rates to approach critical levels, pushing borrowing rates for USDT on AAVE to spike as high as 40%. The withdrawal trapped other large lenders, as borrowers had already claimed most of the remaining USDT. This event highlights the vulnerabilities in decentralized finance (DeFi) liquidity pools and the potential for sudden market stress. USDT, being a preferred borrowing asset on Aave, faced unprecedented demand, leading to a sharp increase in interest rates. The incident underscores the importance of liquidity management in DeFi platforms and the risks associated with large-scale withdrawals. As the market digests this development, stakeholders are closely monitoring the implications for stablecoin liquidity and the broader DeFi ecosystem.

HTX Withdrawal Triggers USDT Liquidity Crunch on Aave, Rates Spike to 40%

Aave's USDT liquidity pool faced a severe stress test after HTX, the exchange formerly known as Huobi, abruptly withdrew $400 million—93% of the available supply—in a single transaction. The MOVE trapped other large lenders, as borrowers had already claimed most remaining USDT. Utilization rates for the stablecoin on Aave, a preferred borrowing asset, approached critical levels.

Interest rates on USDT loans skyrocketed to 40% APY within hours as Aave V3's liquidity plunged by $307 million. New depositors quickly moved to capitalize on the yield opportunity, partially replenishing reserves. Blockchain analysts traced the withdrawn funds to HTX-linked wallets, noting similar large-scale USDT movements between TRON and ethereum via Binance in recent weeks.

Crypto Experts Shift Focus From DOGE and PEPE to Punisher Coin’s Presale Potential

Meme coin markets are witnessing a notable pivot as investors divert attention from established tokens like Dogecoin (DOGE) and Pepecoin (PEPE) to Punisher Coin ($PUN), an emerging Ethereum-based project. With $140,000 raised in its Stage 2 presale, $PUN’s deflationary mechanics, gamified missions, and referral system are drawing speculative interest. The token’s listing target of $0.045—a 12x leap from its current $0.00531 presale price—fuels bullish sentiment.

Unlike transient meme coins, Punisher Coin integrates narrative-driven engagement with economic incentives. Its "Punisher Missions" reward users in $PUN and USDT for activities like meme creation and community campaigns, blending viral appeal with tangible utility. Meanwhile, DOGE and Pepe continue to trade on legacy hype, lacking comparable structural innovation.

Binance Commands 59% of CEX Stablecoin Reserves Amid Market Surge

Binance continues to dominate centralized exchange liquidity, holding $31.45 billion in USDT and USDC reserves—three times larger than closest competitor OKX's $8.2 billion. The stablecoin market cap has ballooned to $254 billion, with Tether's USDT ($153B) and Circle's USDC ($61B) maintaining their duopoly.

The exchange processed $31 billion in stablecoin deposits during May, narrowly outpacing Coinbase's $30 billion. Binance's cumulative stablecoin inflows now exceed $180 billion, supported by transparent Proof-of-Reserves reporting—a contrast to Coinbase's opaque approach.

Combined reserves at Coinbase ($129B) and Binance ($110B) represent 60% of top-20 exchange holdings. The sector sees growing institutional interest, evidenced by Donald Trump-affiliated World Liberty Financial launching its USD1 stablecoin.

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