Circle Pushes USDC Rate Hike On Aave
Circle Chief Economist Gordon Liao proposes raising the USDC interest rate slope on Aave v3 Ethereum Core from 10% to 40% to attract liquidity after the KelpDAO exploit.
Circle's Chief Economist Gordon Liao has published an Aave governance proposal to raise the interest rate slope on the USDC market on Aave v3 Ethereum Core from 10% to 40% initially, with a target of 50%. He believes that higher rates will attract new USDC liquidity providers in an effort to bring utilization back down. The proposal comes in response to the KelpDAO exploit, which has driven the USDC lending market on Aave to 100% utilization for the last four days, leaving lenders unable to withdraw their funds due to insufficient liquidity.
As the proposal notes, debt repayments are being immediately absorbed by a queued withdrawal backlog. The proposal faced community pushback as raising the rate slope can accelerate harm. Higher rates risk triggering liquidations for borrowers who are already trapped. Liquidity providers are reluctant to deposit due to the current uncertainty around a potential lender haircut.
Circle has also faced broader criticism for not offering to inject liquidity directly into its own asset pool as the issuer of USDC. Earlier this month, Circle failed to freeze USDC connected to the DPRK in the Drift Protocol exploit.
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#930 - Arbitrum KelpDAO Recovery, Base Azul Upgrade, Coinbase Quantum Paper
Arbitrum's Security Council freezes $71M tied to the KelpDAO exploit. Base's Azul upgrade introduces multiproofs. Optimism launches Privacy Boost.
Arbitrum freezes 30k ETH.
Base announces Azul upgrade.
Coinbase quantum paper.
OP Labs ships Privacy Boost SDK.
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The Arbitrum Security Council executed an emergency upgrade to freeze 30,766 ETH from an address involved in the KelpDAO exploit, moving $71 million into a frozen intermediary wallet. The council briefly modified the inbox contract on L1 to include a function enabling cross-chain messages that could impersonate any sender, used it once to transfer the funds, then restored the contract. The Arbitrum DAO will decide the next steps. Read more →
Base announced the Azul upgrade, its first standalone network upgrade. It introduces multiproofs and brings Base closer to Stage 2 decentralization. The upgrade also consolidates operations onto base-reth-node and a new base-consensus client built on Kona. Azul is now live on testnet with mainnet activation set for May 13, 2026. Base is also hosting a $250,000 audit competition through May 4. Read more →
The Coinbase Quantum Advisory Council released its first position paper examining quantum computing's impact on cryptocurrency. The report concludes that current cryptographic systems remain secure today, but advances in quantum computing could compromise crypto security within the next decade. Specifically, current wallet-level signature schemes are significantly more vulnerable. Read more →
Optimism introduced Privacy Boost, a plug-and-play SDK for adding confidentiality to any OP Stack chain. The release aims to help projects meet regulatory requirements such as MiCA, BSA, AML/KYC, and GDPR. Privacy Boost combines zero-knowledge proofs with trusted execution environments on a UTXO-based model, generating proofs in under 500 milliseconds, and features a forced withdrawal option. Privacy Boost is now live on OP Mainnet. Read more →
Ethereum fellowship Cohort 6 recap
Aave unfreezes Ethereum core WETH
Mantle working with Aave on recovery
Mantle transitions to ZK Rollup
Etherealize path to $250k ETH
How EEZ unifies Ethereum
Aztec Dev Fundamentals course
OpenGradient launches on Base
Disclaimer: Content is for informational purposes only, not endorsement or investment advice. The accuracy of information is not guaranteed.
Base Introduces Multiproofs With Azul Upgrade
Base's first standalone upgrade since leaving the Superchain introduces multiproofs combining TEE and ZK, plus a new client stack built on OP Kona.
Base announced the Azul upgrade, its first standalone network upgrade since departing Optimism's Superchain. The upgrade introduces multiproofs, enhancing security, decentralization, performance, and the overall developer experience. By combining Trusted Execution Environments (TEE) with zero-knowledge (ZK) proving, multiproofs move Base closer to Stage 2 decentralization.
Azul also streamlines the network architecture by consolidating operations onto a single execution client, base-reth-node, alongside a new consensus client, base-consensus, built on OP Kona. The upgrade is already running on testnet, with mainnet activation set for May 13, 2026. Node operators will need to transition to the new client stack ahead of that date.
Base is currently hosting a $250,000 audit competition on Immunefi running through May 4. Looking ahead, the team plans to introduce an enshrined token standard and Flashblock access lists by the end of June, followed by native account abstraction by the end of August.
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Disclaimer: Content is for informational purposes only, not endorsement or investment advice. The accuracy of information is not guaranteed.