Gordon Liao, Chief Economist at Circle, the issuer of USDC, suggested that structural adjustments, such as significantly raising interest rates, are necessary as Aave's V3 USDC liquidity is virtually nearing depletion. He explained, "In the Aave V3 Ethereum core pool, $60 million in liquidity has decreased over the past 24 hours. This is a result of supply decreasing as repayment volumes matched withdrawal requests. Current interest rate levels cannot resolve the market's supply-demand imbalance. On-chain market trust must be restored and capital inflow encouraged by adjusting some parameters with emergency powers and then finalizing the ultimate parameters through a governance process."
