Half of Aave’s debt sits in just 9% of positions built around one Ethereum correlation trade

Galaxy's Aug. 7 snapshot of Aave V3 Core found 19,073 loans on the protocol after applying standard filters. Fewer than 9% of those positions are using Aave's E-mode setting, account for roughly half of all outstanding debt on the platform, and show an Ethereum correlation trade.Galaxy puts their debt-weighted loan-to-value near 90%, their average health factor around 1.06, and their debt-to-equity ratio near 10.7 times. The remaining 91% of positions carry a debt-weighted LTV closer to 49%, a health factor around 1.79, and debt-to-equity near 1.07 times, a profile with far more room to absorb a bad day.Borrower groupShare of positionsShare of debtDebt-weighted LTVAvg. health factorDebt-to-equityE-mode borrowers8.91%~50%~90%~1.06~10.7xOther analyzed borrowers~91%~50%~49%~1.79~1.07xThe concentrated cohort is holding EthereumGalaxy found that Ethereum staking and restaking wrappers, including weETH, rsETH, and wstETH, make up about 66.2% of the collateral backing these loans, with weETH alone accounting for roughly 42%. On the other side of the ledger, WETH makes up about 73% of the group's debt.Galaxy describes the exposure as a concentrated bet on Ethereum's staking basis and the r...