# 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.

**Published by:** [ETH Daily](https://ethdaily.io/)
**Published on:** 2026-04-23
**Categories:** news, 2026, april2026, circle, usdc, aave, gordon-liao, governance, kelpdao, defi, lending, rates
**URL:** https://ethdaily.io/circle-usdc-rate-hike-aave

## Content

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.Sponsored byEarnUSD is a stablecoin vault by Lido for earning transparent, onchain USD-denominated rewards. Get started today at stake.lido.fi/earnDisclaimer: Content is for informational purposes only, not endorsement or investment advice. The accuracy of information is not guaranteed.

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