Stablecoin rates held flat on Term this week, with USDC rates clearing around 9.00% for four weeks fixed, unchanged from the week prior. On the ETH side, rates were mixed with weETH rates stabilizing ticking up to 8% from the week prior and rates against wstETH collateral flat at 2.23%. On the ezETH side, borrowers rolled of maturing loans as the re-peg trade looks close to resolution.

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Variable Rate Markets

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Basis and Perpetuals Markets

In derivatives markets, implied funding rates on a 30-day trailing basis for 3mo basis and perps reversed trend, falling -8bps and -70bps week over week, respectively.

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Despite this downturn in derivatives funding rates, DeFi rates hold relatively steady with the result that the derivatives —> DeFi money market passthrough rate ticked up slightly to 77% on the week.

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USDC Markets

Turning to the DeFi variable rate market, USDC borrow rates continue to rise, albeit at a much slower pace, increasing +5bp from  9.44% to 9.49% on a 30-day trailing basis.  

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Consistent with this deceleration was the absence of intraday utilization spikes, common in recent weeks. DeFi money markets, it appears, have not been entirely immune to the bearish sentiment in derivatives markets.

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ETH Markets

Turning to ETH rates on Aave V3 , ETH rates close the week flat, with the 30-day trailing rate up just +2bps week over week at 2.42% up from 2.40% the week prior.  This uptick is consistent with rising CESR index rates, which rose +1bps on the week.

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These moving average figures, however, mask a late week uptick in utilization that currently has spot rates at 2.66% as of the time of writing, up +19bps from the week prior.

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Stablecoin Flows

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Lastly, turning to stablecoin flows, the past month was another tepid month with only +1.5bn in inflows with USDT again leading the way and Ethena’s USDe stablecoin a distant second. The gains seen by Ethena’s USDe appear to have come at the expense of FDUSD and USDC.

Looking forward

Broader crypto markets continue to churn sideways. While sentiment seems bearish, ETH is still up +52.78% over the past six months and down just -6.84% over the past month.  As suggested before, expect markets to remain relatively rangebound throughout the summer and into the elections this year and DeFi rates to follow a similar pattern.

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