Same 10,000 USDC loan, 300 a year one week and about 4,150 the next.

Nobody sets Aave lending rates in advance. Each pool reprices itself from one number, utilization, meaning how much of the supplied money is already borrowed. BloFin Academy published a walkthrough of that mechanism today, and the worked example is the part worth keeping.

The image is BloFin's own cover art for the piece, a glowing orange Bitcoin coin on a black background. There's no data in it.

The curve has a bend in it

Most reserves follow two straight slopes that meet at an "optimal usage" point, often called the kink. Below it the borrow rate climbs gently. Above it the second slope takes over and it climbs fast, because the pool is running out of cash for withdrawals and liquidations.

At V3 launch Aave grouped assets like this (base rate 0 for all three):

• Volatile assets (WETH, WBTC, LINK, AAVE): kink at 45%, slope 1 at 4%, slope 2 at 300%
• DAI: kink at 90%, 4%, 60%
• USDC and USDT: kink at 80%, 4%, 75%

Those were launch settings and governance has retuned them since, so treat the table as the shape and read the live numbers on the reserve.

Supply rate is always lower than the borrow rate

The rough formula: supply rate = borrow rate x utilization x (1 - reserve factor). Only the borrowed part of the pool pays interest, everyone shares it, and the treasury takes its reserve factor cut first (10% to 35% at launch depending on asset risk).

Worked case on a USDC reserve

Pool of 1,000,000 USDC, 600,000 borrowed, so 60% utilization. That's three quarters of the way to the 80% kink, so borrowing costs 3%. A 10,000 USDC loan runs about 300 a year. Borrowers pay about 18,000 in total, the treasury keeps 1,800, and suppliers split 16,200, roughly 162 a year per 10,000 supplied.

Then a few whales borrow another 300,000 and utilization hits 90%. Now the rate is the full 4% plus half of the 75% second slope. The same 10,000 loan costs around 4,150 a year, nearly 14x more, and nothing about the borrower's position changed. Suppliers get hit too: only 100,000 USDC is left unborrowed, so a supplier wanting 150,000 back gets 100,000 now and waits for the rest.

The GHO exception

On the Ethereum Core market, GHO has a flat borrow rate that doesn't move with utilization. An August 27, 2026 steward update took it from 3.75% to 4.25% in two steps, so a 10,000 GHO loan went from about 375 to about 425 a year. The flip side: a 100% reserve factor on Core means holding GHO there earns no supply APY at all.

Before you supply or borrow

• Read the reserve's current utilization and its kink, not a screenshot from last week
• Work out the cost at the kink and 10 points above it
• Strip out reward incentives that dashboards blend into one APY
• Pick in advance the utilization level where you repay part of the loan
• Watch the Health Factor too, since accrued interest lowers it even if prices stand still

Every V3 borrow is variable now. The old stable-rate mode was halted after a bug report in November 2023, so any tutorial showing a "Stable" toggle is out of date.