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Morning Edition · Monday, October 12, 2026Published at 1:41 AM EDT · New York
Aave's proposed USDG rollover yields less than most borrowing rates, and some yield-collateral loans sit near liquidation
CryptoSlate's snapshots show a February principal-token yield below three quoted funding rates, plus collateral that can take hours to turn into the stablecoins needed to repay loans.
Aave, the largest decentralized lending protocol, lets users post Pendle principal tokens (PTs) as collateral. A PT pays a fixed yield at a set maturity. Users commonly deposit PTs backed by Global Dollar (USDG), borrow stablecoins against…
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Yield-Collateral Loops Strain DeFi Lenders
As stablecoin yields compress against borrowing costs, leveraged loops built on principal tokens and other slow-to-redeem yield collateral keep unwinding at each maturity, repeatedly testing whether lenders can liquidate assets that cannot be sold instantly.
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