Receive Industry Insights

November 17, 2023

Weekly Market Recap: November 17, 2023

Fixed rates on Term where unchanged to slightly down this week with USDC stablecoin rates holding steady at 3.245% while ETH rates declined -27bps to 2.295% consistent with variable rate markets.  Healthy wETH borrow demand for ETH staking arbitrage continues to show for auctions with ETH staking yields on the climb.  

Historical ETH and USDC clearing rates on Term

Variable Rate Markets

USDC Markets

In the variable rate markets, USDC rates continue to rise with the 30-day trailing average borrow rate continuing to accelerate to the upside. Week-on-week rates rose +103bps (!) from 5.81% to 6.84% on a 30-day trailing basis.

image 39

Volatility in variable rate USDC markets continue remain elevated across the board, with intraday highs exceeding 20% on more than one occasion in the past week.

image 40

In the past week. Aave V2 resumed normal operations, which should help alleviate some pressure in the near term.

ETH Markets

Turning to ETH markets for the first time in this newsletter, ETH borrow rates on Aave V3 declined -10bps from 3.05% to 2.95% on a 30 day trailing basis. This is despite a +17bp rise in ETH staking yields from 3.89% to 4.06% week-on-week as measured by the CESR Composite ETH Staking Yield on the same 30 day trailing basis.

image 42

Diving into market internals, the continued decline in ETH borrow rates appears to be supply driven, rather than demand driven. Since September, borrow demand has remained flat between 295k-300k ETH while supply has risen by +100k ETH from 328k ETH to 428k ETH over the same period.

image 43

The recent uptick in utilization seems to suggest that some savvy users DeFi farmers are beginning to pick up on the trade. Given that borrowers can now "pick" +1% on the spread between staking yields and Aave V3 borrow rates, expect utilization to continue to rise as users get smart to the trade.

To lock in the funding leg of this carry trade, Term will be hosting another wETH/wstETH auction scheduled to close next Wednesday at  

EXCEL_U9v4FHbuY8 1
image 41

This communication is strictly confidential and is intended exclusively for the use of the person to whom it was delivered by Terminal 0, Ltd. ("Term"). It may not be reproduced or re-transmitted in whole or in part without authorization. The contents of this communication and any attachments are solely for information purposes and are provided for your internal use only. Nothing contained herein constitutes an offer, solicitation, or recommendation to sell, or an offer to buy any securities, investment products, or investment advisory services.

This document may contain forward-looking statements and projections that are based on Term's current beliefs and assumptions and on information currently available that Term believes to be reasonable. However, such statements necessarily involve risks, uncertainties, and assumptions, and recipients may not put undue reliance on any of these statements.

Although the information provided herein has been obtained from sources which Term believes to be reliable, Term does not guarantee its accuracy, and such information may be incomplete or condensed. The information is subject to change without notice. Since Term furnishes all information as part of a general information service and without regard to a recipient's particular circumstances, Term shall not be liable for any damages arising out of any inaccuracy in the information.

The information in this presentation is not intended to provide, and should not be relied upon for, accounting, legal, or tax advice, or investment recommendations. Each recipient should consult their own tax, legal, accounting, financial, or other advisors.
The front-end interface for the Term Protocol located at is not available to U.S. persons as well as persons located in certain other jurisdictions. Please see the Terms of Use.