Mystery whale pulls $290 million from DeFi every midnight as Aave borrowing rates triple

An unidentified crypto whale has repeatedly withdrawn about $290 million in USDC from Aave and Sky, temporarily draining liquidity and raising borrowing costs.

Blockchain analytics firm Bitquery reported on Oct. 28 that the withdrawals occurred around midnight UTC, with approximately $134 million leaving Aave and the remainder coming from Sky. The funds typically returned about half an hour later.

These recurring movements have pushed Aave's USDC lending pool close to full utilization, restricting withdrawals for other depositors and nearly tripling borrowing interest rates.

Aave liquidity squeezed

According to Bitquery, the wallet cluster behind the transactions has moved USDC across midnight for 394 consecutive nights since Sept. 30, 2025. Notably, the earliest identified midnight transfers occurred in July 2024.

During October, the withdrawals pushed Aave's median USDC utilization rate from 94% to 99.6%, meaning almost all deposited funds were borrowed and little liquidity remained available.

On six nights, utilization hit 100%, leaving virtually no unborrowed USDC for depositors trying to withdraw.

The Oct. 26-27 transactions illustrate the disruption.

Before the withdrawals, Aave had approximately $173 million in available USDC liquidity. The unidentified holder removed $134.1 million, equivalent to about 78% of those funds.

That left other depositors sharing less than $46 million in immediately withdrawable USDC until the money returned.

Borrowers also faced higher costs as Aave automatically adjusted interest rates to reflect the reduced liquidity.

Bitquery found that median annualized USDC borrowing rates rose from 4.5% before the withdrawals to 13.8% afterward, then fell when the funds returned.

The higher rates lasted only as long as the liquidity shortage, limiting the additional interest borrowers actually paid.

The wallet owner's identity and motivation remain unknown.

The unusual timing initially prompted speculation that the transfers were designed to exploit stablecoin reward programs that calculate earnings using wallet balances at specific times.

Bitquery noted that the withdrawn USDC was repeatedly consolidated into one wallet across midnight, potentially allowing the holder to benefit if rewards were calculated using a daily balance snapshot.

However, Coinbase does not publicly disclose when it calculates USDC rewards, and investigators could not determine whether the wallet received any additional payments.

Meanwhile, Aavescan data showed the pool's borrowing rate fell from 13.27% at midnight UTC on Oct. 28 to 5.45% on Oct. 29.

The lower reading indicates a less severe liquidity squeeze during the latest observed period, although Bitquery has not identified the wallet owner or established whether the recurring transfers will continue.