The Ethereum-based cryptocurrency lending protocol Aave is witnessing a rapid increase in Coinbase Wrapped Bitcoin (cbBTC) flows into its platform due to a new incentives program involving the asset.

While this reflects growing liquidity and rising adoption of the wrapped Bitcoin product on Aave, the market analytics platform IntoTheBlock says it poses a risk to users. According to an IntoTheBlock tweet, users may be temporarily unable to repay their loans on Aave if the situation goes sideways.

cbBTC Increases $200M Weekly on Aave

Earlier this year, Aave launched Merit, a system designed to reward users participating in activities on the platform. Some actions that can earn them incentives from the program include holding stkGHO, the staked version of Aave’s algorithmic dollar-pegged stablecoin, GHO, and borrowing USD Coin (USDC) on Base, the crypto exchange Coinbase’s Ethereum-based layer-2 protocol.

In mid-August, the Aave decentralized autonomous organization (DAO) implemented the Merit incentive program on Base, aiming to reward users contributing to the growth of the Aave ecosystem on the L2.

As Coinbase prepared to launch cbBTC in mid-September, Aave submitted another proposal to onboard the wrapped token using its protocol.

Roughly a month after cbBTC’s launch, an Aave DAO service provider revealed that the protocol housed about 56% of all cbBTC in circulation. The tweet also disclosed that Aave would