Blockchain analytics firm Bitquery reported recurring nightly withdrawals of approximately $290 million in USDC from Aave and Sky, with roughly $134 million leaving Aave. The transfers typically occur around midnight UTC and are returned approximately half an hour later, but the wallet owner's identity remains unknown.
According to Bitquery's analysis, the wallet cluster behind the transactions has moved USDC across midnight for 394 consecutive nights since September 30, 2025, with the earliest identified transfers dating to July 2024.
Impact on Aave Liquidity
The recurring withdrawals have severely constrained available liquidity in Aave's USDC lending pool. During October, the movements pushed median USDC utilization from 94% to 99.6%, with utilization reaching 100% on six nights. This left other depositors with minimal withdrawable funds until the capital returned.
On October 26-27, the unidentified holder withdrew $134.1 million from Aave's available liquidity of approximately $173 million, leaving other depositors with less than $46 million in immediately accessible USDC.
Borrowing Rate Spikes
The liquidity squeeze triggered automatic adjustments to Aave's interest rates. Median annualized USDC borrowing rates rose from 4.5% before the withdrawals to 13.8% afterward, nearly tripling the cost of borrowing. Rates fell when the funds returned, limiting the total additional interest borrowers paid during the shortage periods.
Aavescan data showed the borrowing rate fell from 13.27% at midnight UTC on October 28 to 5.45% on October 29, indicating reduced liquidity pressure during the latest observed period.
Unknown Motivation
The unusual midnight timing initially prompted speculation about potential exploitation of stablecoin reward programs that calculate earnings using wallet balance snapshots at specific times. Bitquery noted that the withdrawn USDC was repeatedly consolidated into one wallet across midnight, potentially positioning the holder to benefit from such reward structures.
However, Coinbase does not publicly disclose when it calculates USDC rewards, and investigators could not confirm whether the wallet received additional payments or determine the actual motivation behind the transfers. Bitquery has not identified the wallet owner or confirmed whether the recurring withdrawals will continue.
