Aave's Weekend Price Gap Exposes Lenders to USDC Losses
Aave's stock-token loans expose lenders to USDC price gaps over weekends.
The issue arises from the way Aave handles equity-linked feeds, which hold Friday's prices until Sunday evening. This creates a gap between the published oracle value and the actual market price, leaving lenders vulnerable to losses.
Aave Labs' Mag-7 lending spoke has a $21 million USDC draw cap, limiting how much lenders can borrow. However, this does not prevent interest from pushing a position across the liquidation threshold while the feed is frozen.
The problem is further complicated by the fact that redemption is not automatic for seized tokens. Liquidators may need to sell on Base, seek an eligible redemption counterparty, or use a hedge while waiting to close exposure.