How does Aave handle insufficient liquidity for withdrawals?
- Aave Pool Aave
I have a question about a part of the FAQ on withdrawing:
"ou would need to make sure there is enough liquidity (not borrowed) in order to withdraw, if this is not the case you would need to wait for more liquidity from suppliers or borrowers repaying.
Just to make sure I understand this, say I supply USDC to Aave. If there isn't enough USDC available in the pool when I try to withdraw, do I just have to wait until there's sufficient USDC? Has that situation ever happened in the past? Is there anything Aave can do in that situation (e.g. force repayment of loans, swap other collateral into USDC, etc.) to obtain USDC for withdrawals? Thanks!"
Answers 1
If everything is borrowed you need to wait until more deposit or/and people repay so the utilization rate goes down. This can happen with assets with low deposit liquidity ( for e.g in Aave v1 market).