On August 20, the ETA rose by about 18 per cent a day, one of the strongest single-day manifestations in almost two years. According to the external media review, this round of increase, while leading to large-scale silos in derivatives markets, did not address the more alarming risk in Aave ' s lending structure: a small number of high-leverage positions bore nearly half of the Platform ' s debt.

Aave is one of the largest decentrized lending agreements on a current scale, with a total warehouse value of approximately $12.2 billion. The article quoted data from the chain that about 9 per cent of the warehouse space on the platform bore almost half of the total debt. Most of these warehouses are built around the same transaction: using ETH pledge derivatives as collateral, lending WETH, then continuing the pledge and revolving to enhance the position.

9%. Warender takes almost half of the debt.

The common denominator of this position is the high concentration of the collateral on the mobile and re-commitment tokens, including weETH, rsETH and wstETH. Of these, weETH alone accounted for approximately 42 per cent of the related collateral, while the bulk of the debt in this warehouse was WETH, which accounted for about 73 per cent.

According to the article, the value of the debt-weighted loans for this portion of the warehouse is close to 90 per cent, with an average health factor of about 1.06 and a debt equity of about 10.7 times. In other words, the pads are already thin, and as long as the price of the collateral relative to ETH is further expanded, liquidation may occur quickly.

  • Aave, the total warehouse value is about $12.2 billion.
  • Stabilized currency deposits of approximately $8.98 billion
  • Stabilized currency lending of about $7.4 billion

The risk is not ETH up, it's out of anchor

According to the article, the core of such a strategy is not simply a bet on an ETH rise, but a bet on a tight anchor between a pledge derivative and an ETH. The trader first deposits a token such as weETH or wstETH, then lends WETH, then pledges the borrowed WETH again, and circulates repeatedly to enhance the pledge proceeds.

The problem is that once these packaging pledge tokens are depreciated relative to ETH, the whole structure is under pressure. The average health factor of just 1.06 is likely to drop down on the liquidation line if the relevant token is about 8 to 9 per cent below ETH.

The article mentioned that in March 2026, Aave had to trigger the liquidation of some $26 million to $27 million wstETH due to the delay in the risk predictor parameters. Although the impact was limited at that time, it has been shown that the prophecies may be magnified by a combination of prognosis and concentration.

ETH, the surge temporarily covered up the problem.

According to this review, the ETH surge on August 20th did not trigger chain risk because the price rise improved the health factor in the relevant warehouse, and the pledge derivatives largely followed the ETH rise without a significant breakout.

But this does not mean that the risk has disappeared. On the contrary, higher prices may allow part of the traders to continue to leverage and re-establish the position at higher price levels to the nearest health factor. In the event of a subsequent ETH fall or a weakening of collateral derivatives, the pressure may be refocused to this silo.

The article also noted that the DeFi loan agreement did not have a cut-off mechanism in the traditional market and that there was no buffer period for artificial additional deposits. Once a health factor has collapsed, the liquidation is automatically carried out on the chain. If a large number of accounts were triggered at the same time, the sale of the same kind of collateral itself would further reduce the price and result in a continuous liquidation.

There's no precedent in history.

The article recalls that similar deviations are not hypothetical. In June 2022, during the Terra/Luna crash, Lido's steh was at one point about 7 per cent below the ETH discount; in November of the same year, when the FTX wind wave spread, Rocket Pool's rETH also briefly broke the anchor. While these deviations eventually recede, the chain of liquidation would occur more quickly if high-leveraging lending positions were folded.

This means that the deeper problems on Aave are not really being tested when the market is concerned about the ETH day-to-day increase and empty-headed silos. The central judgement of the article is that it is not only whether ETH can continue to rise, but also whether the pledge derivatives can maintain a price relationship with ETH in a stress environment.