RWA leverage onchain runs almost entirely through variable-rate pools, where the borrow rate is set by utilization rather than by a lender agreeing to a price. Illustratively, Aave’s rate curve lifts the USDC borrow rate from 4% to 14% as utilization climbs from 92% to 100%. JAAA yields between 4.5% and 5% and Maple’s syrupUSDC pays 5.2%, while the one-year average USDC borrow rate on Aave V3 Ethereum is 4.56%, leaving just 50 basis points of spread to work with. The variance in these borrow rates scares off would-be RWA loopers or limits them to double-digit-yielding RWAs, which greatly narrows the accessible universe of investment-grade credit. Coin Metrics found routine daily utilization spikes on a $2 billion pool and the April 2026 KelpDAO rsETH exploit pinned Aave’s USDC pool at 100% utilization, causing borrowers to pay the maximum 14% rate for five days. Since tokenized credit products can take anywhere from T+1 to…
