OAK reported that PT-reUSD/$USDC‘s borrow APY jumped from 9.7% to 39.7% during the liquidity drain and stood at 11.7% at its Oct. 31 snapshot. PT-USD3/$USDC reached 38.9% before easing to 8.9%. The strUSD/$USDC and PT-trUSD/$USDC markets touched 38.3% and 42.5%, respectively, before falling to 11.2% and 12.7%.
Why Repayments Did Not Immediately Restore Liquidity
Morpho’s interest-rate model targets 90% utilization, the share of supplied funds that has been borrowed. As utilization rises above that target, borrowing rates increase. When lenders remove cash while debt stays largely unchanged, utilization climbs.
Repayments need not break that squeeze if lenders withdraw the newly available funds. In PT-reUSD/$USDC, supply and debt were both 128.8 million $USDC at 6 p.m. ET on Oct. 29. By 5 a.m. ET on Oct. 30, both had fallen to 118.3 million $USDC: less debt, but still no immediately available liquidity at that snapshot.
Binance, whose withdrawal suspension The Defiant previously covered, said on Oct. 31 it was still working toward reopening withdrawals.
By 1 p.m. ET on Oct. 31, PT-reUSD/$USDC had regained about 13.0 million $USDC of immediately available liquidity, according to The Defiant’s calculation of Morpho’s supply and debt figures.
