Aave has adjusted the interest rate model for USDT on its Ethereum V3 Core market. On October 21, 2026, the protocol lowered the utilization threshold, known as the kink, from 94% to 92%. This change, which took effect at block 26,241,799, causes variable borrow rates to increase more rapidly as pool utilization rises.
The adjustment follows a recommendation from the risk management firm LlamaRisk, issued on October 20, 2026. Under the previous model, 94% utilization resulted in a 4.5% borrow APR. With the new parameters, the same utilization level pushes the rate to approximately 7%. The protocol aims to create an additional withdrawal buffer of about 57.8 million USDT.
The new interest rate structure applies only to future accruals, leaving previously accrued interest unchanged. Between 92% and full utilization, borrow rates can now climb from 4.5% to 14.5%. By late October, USDT utilization on the platform peaked at approximately 94.3%, with supply APY reaching 6.50% and variable borrow APY hitting 7.70%.
