Large Players Withdrew Huge Amounts of Ethereum from Aave, Causing a Liquidity Strain
Date: 2025-07-24 Author: Oliver Abernathy Categories: CRYPTO PAYMENTS
At some points, the yield on loans in wETH exceeded 10% per annum. This was beneficial for liquidity providers, but became a serious problem for users who borrowed the assets. Traders who used a looping strategy - repeatedly borrowing and re-investing Ethereum to make a profit through staking - were particularly affected. The mass closure of such positions forced liquid staking providers to unblock the coins.
As a result, a huge queue of funds was formed. As of July 23, the expected withdrawal volume was a record 633,896 ETH. This caused a temporary liquidity strain on the platform. Funding rates have gradually stabilized now, but the incident clearly showed the influence that large players can have on the market.
Who is behind the withdrawals?
In an interview with DLNews, Aave contributor Mark Zeller noted that he considers TRON founder Justin Sun to be one of the main people withdrawing large amounts. According to him, Sun regularly transfers and withdraws significant amounts from the protocol. Arkham analytics confirms that his wallets have withdrawn about $650 million in Ethereum, while stETH worth about $390 million remains in his addresses.
"[Sun] is behaving unpredictably. He operates with billions of dollars as easily as someone goes to the store," Zeller wrote in the Telegram chat.
Additionally, addresses associated with the crypto exchange HTX have withdrawn approximately $450 million, while investment firm Abraxas Capital Management has withdrawn over $100 million in the past week.
These active movements coincided with a general increase in activity by large investors in the Bitcoin and Ethereum markets, which led to large-scale movements of digital assets worth billions of dollars.
As such, the recent events surrounding Aave have become a clear example of how the actions of large participants can dramatically change market conditions and create a temporary liquidity shortage that affects all users of the protocol.
