Ethereum Borrowing Rates Skyrocket: Cheapest Option Now 80% LTV at 3.82%

The cost of borrowing against Ethereum (ETH) in decentralized finance (DeFi) varies widely across different markets. According to recent data, the cheapest option is Aave v3 on Arbitrum, with a variable borrow rate of up to 80% LTV at 3.82% per year. In contrast, the most expensive market for borrowing against ETH is Ethereum itself, with rates reaching as high as 13.76% per year.

Lending out ETH in DeFi pools also offers varying returns, ranging from 0.3% to 2.7% per year in the largest pools. The largest pool, Aave v3 on Ethereum, pays a supply rate of 1.5%. It's worth noting that these rates are variable and subject to change based on market demand.

One factor contributing to the higher returns for lending out ETH is its steady demand as collateral. Traders borrow ETH to short it or loop staked ETH, driving up the price lenders can earn on their deposited assets.