Spark: The removal of rsETH assets in January once triggered strong dissatisfaction among ETH margin trading users, but it has now been proven that the strategy was cautious.

Deep Tide TechFlow News, on April 19th, Spark Protocol’s strategy leader monetsupply.eth posted on the X platform stating that in January of this year, assets with low usage such as rsETH were delisted and collateral and functionality ranges were continuously tightened. This move at the time triggered strong dissatisfaction among users of “ETH leverage.” Additionally, Spark has long set a relatively high maximum interest rate cap for ETH lending markets, and over the past year, it has transferred some business and revenue to Aave (whose ETH borrowing rate once dropped to 10% or below). However, in the current market crisis environment, this strategy has proven to be more prudent. Currently, SparkLend still maintains sufficient ETH withdrawal liquidity, while Aave has experienced liquidity shortages or even “lock-up” situations in the Ethereum mainnet and multi-chain markets such as Arbitrum and Base.

monetsupply.eth further warns that since ETH is the core collateral asset, when market utilization reaches 100%, collateral liquidation cannot be executed normally. Liquidity exhaustion not only affects depositors’ experience but may also pose systemic risks. Under the current liquidity shortage of Aave, a 15%-20% drop in ETH price could lead to significant bad debt accumulation (adding to the potential impact of the rsETH incident).