@eeii
The core issue with the curation vault model lies in the illusion of isolation. Curators are meant to manage distinct strategies and segregate risk, yet in practice, they all end up supplying liquidity to the same underlying lending markets. What is designed to promote diversification instead concentrates exposure, turning one curator’s stress into everyone’s problem.
Despite being framed as modular and independent, the model inherently links all vaults through shared borrower pools. Liquidity from multiple curators merges into a single system, so the decisions or withdrawals of one can ripple instantly across all others as we see with recent issues with xUSD and similar assets. Even a cautious curator cannot escape the fallout from a more aggressive participant operating within the same pool.
When confidence falters or withdrawals accelerate, these shared markets seize up. Utilization shoots to 100%, redemptions grind to a halt, and borrowing rates spike to unsustainable levels.
Just use Aave.
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