Chaos Labs: Aave's $4.7B Exposure to Ethena Could Trigger "Liquidity Crunch"
BlockBeats News, August 5th, according to DL News, Aave's risk advisor Chaos Labs stated that as the deposit amount of the US dollar-pegged token USDe in the protocol continues to increase, Ethena's USDe stablecoin may pose a threat to Aave's robustness and trigger liquidity crunch. Chaos Labs discussed the potential risks of Aave's exposure to Ethena, which has been increasing, in a post released on Saturday on the Aave governance forum. Chaos Labs pointed out that when USDe holders deposit a large amount of the token into Aave, and its issuer Ethena simultaneously lends out the stablecoin backing that asset, a significant risk is formed. Ethena must avoid overallocating its stablecoin reserves to Aave. Self-imposed limits on such exposure help ensure redemption reliability and market stability. Ethena has not immediately responded to a request for comment.
Ethena has deposited $580 million of USDe-backed assets into Aave, a strategy known as rehypothecation. In addition, Aave's current $4.7 billion exposure comes from USDe-backed assets, including PT and sUSDe, accounting for over 55% of USDe's total supply. Chaos Labs stated: "The dual role of backed assets, serving as both Aave's redemption capital and liquidity, has created a vulnerability that could exacerbate pressure on both protocols during a deleveraging event." Due to the growth and contraction cycles of the support mechanism, in a bearish market, if the backed assets are borrowed, USDe holders' redemptions may pose issues, with the circular strategy amplifying the risk, potentially leading to Aave's liquidity crunch, rising borrowing rates, and triggering a chain reaction. However, there is currently no immediate cause for concern, as the unwinding of contraction cycle positions may offset the surge in utilization. But as USDe grows or rehypothecation increases, the situation may change. Chaos Labs is developing a new risk prediction tool to adjust rates, ensuring orderly redemptions during periods of market stress.
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WEEX P2P update: Country/region restrictions for ad posting
To improve ad security and matching accuracy, WEEX P2P now allows advertisers to restrict who can trade with their ads based on country or region. Advertisers can select preferred counterparty locations for a safer, smoother trading experience.
I. Overview
When publishing P2P ads, advertisers can now set the following:
Allow only counterparties from selected countries or regions to trade with your ads.
With this feature, you can:
Target specific user groups more precisely.Reduce cross-region trading risks.Improve order matching quality.
II. Applicable scenarios
The following are some common scenarios:
Restrict payment methods: Limit orders to users in your country using supported local banks or wallets.Risk control: Avoid trading with users from high-risk regions.Operational strategy: Tailor ads to specific markets.
III. How to get started
On the ad posting page, find "Trading requirements":
Select "Trade with users from selected countries or regions only".Then select the countries or regions to add to the allowlist.Use the search box to quickly find a country or region.Once your settings are complete, submit the ad to apply the restrictions.
When an advertiser enables the "Country/Region Restriction" feature, users who do not meet the criteria will be blocked when placing an order and will see the following prompt:
If you encounter this issue when placing an order as a regular user, try the following solutions.
Choose another ad: Select ads that do not restrict your country/region, or ads that allow users from your location.Show local ads only: Prioritize ads available in the same country as your identity verification.
IV. Benefits
Compared with ads without country/region restrictions, this feature provides the following improvements.
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Trading security
Reduces abnormal orders and fraud risk
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Matches ads with more relevant users
Order completion rate
Reduces failures caused by incompatible payment methods
V. FAQ
Q1: Why are some users not able to place orders on my ad?
A1: Their country or region may not be included in your allowlist.
Q2: Can I select multiple countries or regions when setting the restriction?
A2: Yes, multiple selections are supported.
Q3: Can I edit my published ads?
A3: Yes. You can edit your ad in the "My Ads" list. Changes will take effect immediately after saving.

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