Welcome to another DeFi Markets Update—your no-nonsense briefing on the cryptobanking plumbing and market pulse.
Binance Hack Pushes Up Lending Rates Across Markets
On October 29, Binance suffered a hot wallet hack involving about $6.3bn in assets. The Steakhouse team was in the war room from the first reports online, monitoring our markets and checking exposure with collateral issuers.
As one would expect, users became cautious and withdrew around $237m from Steakhouse vaults in the first 28 hours following the incident. Within three days, more than half of those funds had been re-deposited from the same wallets. Steakhouse markets recorded zero bad debt throughout the incident.
It was also interesting to see how borrowers behaved after deleveraging. We examined 114 Morpho positions that each repaid $250k or more during the incident, $308m in total. Of those, 44% have borrowed again, including 14% that re-levered even further, borrowing more than they had repaid.
The liquidity squeeze during the incident increased lending rates by a lot, with Ethereum cbBTC/USDC doubling from 5% to 10%.
Over the weekend, depositors could benefit from the higher lending yields following the hack. Rates have now more or less returned to the pre-hack levels, with some Ethereum markets still having slightly elevated yields.
Grove × Steakhouse Becomes the Largest Vault on Morpho
The Grove × Steakhouse USDC vault on Base has become the largest vault on Morpho, with over $560m in deposits.
Grove brings substantial USDC liquidity onchain to Morpho’s lending markets. The vault’s conservative strategy allocates most liquidity to cbBTC and WETH-backed markets, giving borrowers greater access to stablecoins against blue-chip collateral.
The vault consistently earns around 4-5% APY, recently exceeding 6%.
Deposits continued growing through the withdrawals following the Binance incident, increasing by around $120m between 27 and 31 October. This shows how Grove’s liquidity can act as a stabilising mechanism, easing pressure on utilisation and borrowing rates during heavy withdrawals.
Ethena Pay Launches Earn+ with Steakhouse
We partnered with Ethena to curate Earn+, its new earn vault in the Ethena Pay app. This gives users access to a USDe vault targeting up to 12% APY.
The vault borrows USDT against USDe with an intended leverage of around 11x, with Steakhouse adjusting the position as rates change. Borrowing liquidity comes from Aave V4’s pooled Avalanche Hub through a Spoke, an Aave lending market connected to the Hub with its own collateral and risk parameters.
The earn vault has already attracted over $4m in deposits since launching last week, on October 28.
Earn+ is available exclusively to eligible Ethena Pay users. There is no lock-up, and withdrawals are normally processed back into the USD balance within 24 hours.