A group of unidentified wallets has repeatedly moved about $290 million in USDC between Aave and Sky around midnight, with the funds typically returning roughly 30 minutes later. During the temporary outflows, Aave’s USDC lending pool became critically tight: in October, median utilization reached 99.6% and the median annualized borrowing rate rose from 4.5% to 13.8%. The shortfalls left depositors with less USDC available to withdraw and raised borrowing costs while liquidity was constrained.
Midnight transfers logged on 394 nights
Blockchain analytics firm Bitquery disclosed on October 28 that the transfers take place around midnight UTC. About $134 million comes from Aave, with the remainder from Sky. The wallet cluster has moved USDC around midnight for 394 consecutive nights since September 30, 2025. Bitquery identified earlier midnight transfers dating back to July 2024.
The funds have not permanently left the protocols: USDC typically returns after about half an hour. As a result, the rate increases and liquidity pressure are concentrated in the period between the outflow and the return. Until the funds come back, however, Aave’s pool can have very little idle USDC, potentially limiting depositors’ ability to withdraw.
Aave’s available USDC fell below $46 million
Aave’s USDC pool median utilization rose from 94% to 99.6% in October, meaning nearly all deposited funds were borrowed. Bitquery said utilization reached 100% on six nights, when almost no unborrowed USDC remained for depositors to withdraw.
Transactions on October 26–27 show the scale of the impact. Aave had about $173 million in available USDC before the transfer; $134.1 million was then moved out, equal to roughly 78% of the available balance. Until the funds returned, less than $46 million remained immediately available to other depositors.
Aave adjusts borrowing rates automatically in response to supply and demand in each pool. Bitquery data shows the median annualized USDC borrowing rate rose from 4.5% before the transfer to 13.8% afterward, then fell once the funds returned. The higher rate lasted only while the liquidity gap persisted, so the additional interest paid by borrowers depended on how long the shortage continued.
Wallet ownership and reward motive remain unconfirmed
The wallet owners and their reason for moving the funds are unknown. Because the transfers repeatedly happen around midnight and concentrate the funds in one wallet, some have speculated that the activity could be connected to stablecoin rewards calculated using balances at a particular time. Bitquery said the mechanism could, in principle, benefit holders through a daily balance snapshot, but there is no evidence that these wallets received additional rewards.
Coinbase has not publicly explained when it measures balances for its USDC rewards, and the investigation did not establish whether the wallet received any extra payment. Aavescan data shows Aave’s borrowing rate fell from 13.27% at midnight UTC on October 28 to 5.45% at midnight on October 29, indicating that the liquidity pressure had eased in the latest observation. The wallets’ ownership and motive, and whether the transfers will continue, remain unconfirmed.