Key Takeaways
Aave's proposed USDG rollover yields less than typical borrowing rates, with outcomes relying heavily on leverage and rewards.
According to CryptoSlate, risk provider LlamaRisk reported that Aave's proposed USDG rollover plan features a February principal token yield that falls below three quoted borrowing rates on the X Layer network. In assessments, the February token yield trailed borrowing costs for USDT0, USDC, and USDG, with GHO serving as a cheaper exception.
The proposed mechanism involves moving holders of the token maturing October 29 into a replacement position maturing February 25, 2027. TokenLogic proposed a flash-loan transaction to handle debt repayment and collateral replacement, which requires independent implementation by OKX.
Data from October 10 showed an implied annual percentage yield of about 2.98% for the February PT, while variable borrowing APYs reached 4.12% for USDT0, 5.87% for USDC, and 3.75% for USDG. LlamaRisk noted that higher leverage turns negative funding spreads into an overall negative return before accounting for rewards and execution costs. Furthermore, reward terms for the February rollover remain separate from October campaigns, and USDG is absent from the proposed E-Mode 9 borrowing category.
Source & Fact-Check Note
https://cryptoslate.com/aaves-proposed-usdg-rollover-faces-higher-borrowing-costs-and-uncertain-rewards/
