Fixed rates on Term diverged this week with USDC stablecoin rates dipping around -25bps to 3.245% while ETH rates rose +15bps to 2.47% on the back of a record auction that saw 953 ETH cleared.  With ETH breaking $2k in this week's rally and gas prices heating up, staking rates have been on the rise. According to the CESR Compound Ether Staking Rate Index, staking returns ranged between 3.94%-4.53% in the last five days. Should this trend hold, expect demand for ETH borrow to continue to rise.  

Historical ETH and USDC Clearing Rates on Term

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Variable Rate Markets

In the variable rate markets, USDC rates continue to rise with the 30-day trailing average borrow rate accelerating to the upside. Week-on-week rates rose +58bps from 5.23% to 5.81% on a 30-day trailing basis.

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Volatility in variable rate markets also rose across the board. What is notable is that in addition to the fact that intraday volatility remains elevated, variation in the day-on-day average borrow rate has increased dramatically as well.

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Lastly, in a major hit to DeFi lending markets, Aave notified the community via Twitter on November 4  that they would be pausing Aave V2 on Ethereum, along with a handful of V3 markets on L2s due to a bug report submitted to the core team. As of writing Aave V2 on Ethereum remains paused for supplying and borrowing. Despite this news, TVL on Aave remains steady.

Looking forward, it is hard to say when borrow rates will begin to stabilize, but based on research from a couple weeks ago, so long as this mini bull market continues, expect rates to remain elevated.

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