Gordon Liao, Chief Economist at Circle, the USDC issuer, suggested that structural adjustments, such as significantly raising interest rates, are necessary as Aave's V3 USDC liquidity is virtually nearing exhaustion. He explained, "Liquidity in Aave V3's Ethereum core pool decreased by $60 million over the past 24 hours. This is a result of supply shrinking as repayments aligned with withdrawal requests. The current interest rate level cannot resolve the supply-demand imbalance in the market. On-chain market confidence must be restored and capital inflow induced by adjusting some parameters with emergency authority and then finalizing the parameters through a governance process."
