"Most people exiting crypto were bad investors. Most VCs who left, they left because they weren't good. That's capitalism working."

Well, 95% of CT soon realizing it's too rough to spend any time in here anymore.

Lmao. No one with a sane mind will rotate to NFTs here

https://x.com/icobeast/status/2045934456557510938?s=52

in earlier cycles you'd say we are close to a bottom on headlines like this.

love this-

scoreboard is for the audience not the player

kind of find the above true.

when I am on a great run and earning money I never check my balance or net worth.

but when I go for a long time without earning money I g ointo defense mode and tend to check net worth more often.

You can deposit stablecoins directly into IBKR now powered by ZeroHash

Good way to off-ramp from crypto

• 24/7 deposits (near instant processing)
• Fees: up to ~0.35% (min $1) + network fees
• Limit: ~$25,000 daily and ~$250,000 monthly (varies by account & country)

Since it was known that AAVE had bad debt, normal people who had money on AAVE in ETH/stablecoins rushed to withdraw, which pushed utilization on the WETH pool up to 100%.

At 100% utilization, there is no spare liquidity left in the pool, so even if your deposit is “there” on paper, there’s nothing available for you to pull out until borrowers repay or new deposits come in.

On top of that, Aave froze rsETH markets and some related markets as a defensive measure, which limited movements and added to the perception that funds were stuck.

The rsETH‑backed loans that created the hole couldn’t be liquidated properly, leaving Aave with bad debt in the WETH pool and no automatic way to refill the missing liquidity.

But why is this so bad?

When WETH utilization hit 100% and withdrawals were effectively blocked, many depositors realized they were trapped in the pool but still had borrowing power against their positions.

To avoid being the last ones left holding all the protocol risk, they started maxing out their available credit lines, borrowing as much stablecoins/ETH as they could against their collateral.

The logic is: “If I can’t get my deposit out, I’ll at least pull value out via loans,” turning themselves from net lenders into net borrowers.

This rush to borrow on top of already‑maxed utilization pushed the pool even deeper into stress, because it drained any marginal liquidity that might have come back in.

It also increases systemic risk: more leverage in a pool that already has bad debt makes any eventual unwind or recapitalization more painful for whoever ends up paying for the shortfall.

Because people were stuck in Aave’s pools, many maxed out their borrowing instead, pulling as much value as possible out of the system via loans. This turned trapped depositors into highly leveraged borrowers on a protocol that already had a bad‑debt hole.

That behavior deepened the liquidity crisis: utilization in key pools (WETH, USDC, USDT) hit or stayed near 100%, withdrawals were blocked for billions in assets, and any small inflow of new liquidity got vacuumed out instantly.

Confidence shock then radiated outward: whales and treasuries yanked over 5–8 billion dollars from Aave, AAVE’s price sold off hard, and DeFi‑wide TVL dropped as people derisked from similar lending/bridge setups (Morpho, Sky, Fluid, Kamino ++)

Other protocols that integrated rsETH or relied on LayerZero routes reacted by pausing bridges, freezing markets, or tightening parameters, which spreads the liquidity squeeze and makes cross‑protocol capital less mobile.

If users and institutions now treat “blue chip” DeFi money markets as structurally risky, the cost of capital across DeFi goes up: lower deposits, higher rates, stricter collateral, and a persistent discount on anything that depends on bridged assets or stacked LST collateral.

https://theblackswans.substack.com/p/who-pays-when-blue-chip-defi-breaks

Also true for crypto

https://x.com/therealestateg6/status/2046214944262082916?s=46

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)

https://x.com/MonetSupply/status/2046249352381825476?s=20

Shouldn’t this gap be filled quicker?