aave was a fairly central part of the defi ecosystem, so there are various secondary impacts to other protocols from the current crisis one of the largest is probably Ethena USDe, via the Aavethena partnership in practice how this has worked is: 1) Aave lists Ethena USDe and sUSDe as collateral within various markets (currently Ethereum Core, Plasma, Mantle, and Ink) 2) Ethena deposits their stablecoin reserve USDC and/or USDT backing into Aave, boosting Aave market size 3) Loopers deposit sUSDe, USDe, and/or Ethena PTs, and borrow out USDC/USDT to lever up on Ethena yields often with Ethena paying additional incentives ("liquid leverage") which boosts Ethena circulating supply Ethena is now mostly out of Aave deposits (notable exceptions of Mantle where Ethena has $268 million stuck and potentially subject to a partial haircut, along with $140 million USDtb deposit in Aave Core which Ethena is inexplicably not withdrawing despite the risk of capital impairment) with stablecoin markets at full utilization across the 4 markets, loopers are now at significant negative ROI (potentially -50% APY or more). in practice, this means we expect the Aavethena loop to essentially fully unwind in the coming days, which could result in roughly ~1.4 billion reduction in USDe circulating supply (~25% reduction) more fundamentally, this situation puts certain business practices of leveraging risk management decisions as part of strategic partnerships in a negative light is it appropriate to allocate user funds at below the risk-free rate to secure collateral listings? or on the other side to give commercial considerations precedence over risk management during the collateral onboarding process? my opinion is NO, curators should be putting their users first