[ARFC] Aave V4 Activation on Ethereum Mainnet

LlamaRisk · September 25, 2026, 9:14am

Summary

LlamaRisk recommends an eighteenth round of Add Cap and Draw Cap adjustments for Aave V4. Following the execution of Round 17, total deposits across the six hubs on three chains grew to approximately $950M, led by the Core Hub at approximately $487M and by the Arc Core Hub, which reached approximately $232M in its second week. This round proposes replenishing the Core Hub’s credit lines to the Plus Hub, which have again reached full utilization, alongside continued increases to the weETH collateral add caps on the Core Hub, further USDe expansion on the Plus Hub, syrupUSDG cap increases on the Global Dollar Hubs, doubled USDC and USDt add caps on the Avalanche Core Hub, and cap increases on the Arc Core Hub, where the USDC add cap moves from 150,000,000 to 200,000,000, the USDC draw cap from 51,000,000 to 100,000,000 after the existing line was fully drawn, and the cirBTC add cap from 1,100 to 1,600. We also recommend aligning stablecoin and WETH IRMs with the recently implemented V3 changes.

The proposed adjustments add approximately $163M in additional Add Cap capacity: Ethereum Core $34M, Ethereum Plus $15M, Global Dollar $10M, Avalanche Core $12M, Arc Core $92M. Total market capacity would move from approximately $1.82B to $1.99B.

Rationale

Round 17 caps are now live. Total deposits increased by approximately 34% over the week, with the Arc Core Hub standing out as USDC supply moved toward the doubled cap and cirBTC deposits reached 91% of their add cap.

On the Core Hub, we propose increasing the weETH and USDG caps to accommodate continued demand. USDe caps are also proposed to be increased following last week’s full utilization.

On the Global Dollar Hub, we propose increasing the syrupUSDG caps, which were fully utilized, while reducing the PT-USDG add cap to 1 as the collateral matures on September 24. The stablecoin draw lines against PT-USDG will remain in place to facilitate an orderly unwind of existing positions.

On the Avalanche Core Hub, the three stablecoin reserves closest to their ceilings are USDC on the Main Spoke (98% of a 10,000,000 cap), USDC on the Forex Spoke (96% of 1,000,000) and USDt on the Forex Spoke (86% of 1,000,000). We propose doubling each add cap. Draw caps are left unchanged, as USDC borrowing on the Main Spoke sits at 41% of its 9,000,000 line and the Forex lines are barely used.

On the Arc Core Hub, the USDC draw cap of 51,000,000 on the Main Spoke was fully utilized on September 24, as USDC borrowed against the line rose from approximately $1.5M to $50,987,826. We propose raising the USDC add cap to 200,000,000 and the draw cap to 100,000,000. At current supply, a fully drawn 100,000,000 line corresponds to 70% utilization, which sits below the 90% Optimal Usage Ratio of the USDC interest rate curve, and the higher add cap leaves room for the supply that has followed each cap increase on this hub so far. cirBTC deposits on the same spoke reached 1,003 against a 1,100 cap (91%) within a day of the first inflows, so we also propose raising the cirBTC add cap to 1,600, approximately $135M at the current oracle price.

IRM

Alongside the cap adjustments, we recommend aligning stablecoin Growth Before Optimal (Slope1) parameters to a 4.5% floor, consistent with the recently implemented V3 changes outlined in TokenLogic’s Stablecoin Rate Adjustments thread.

For WETH on the Ethereum Core Hub, we recommend lowering Slope1 to 2.2% to align with the corresponding V3 markets. The proposed IRM changes would have the following impact on rates:

Hub	Asset	Current Utilization	Borrow APR now → new	Supply APR now → new
Core	USDT	96.0%	13.88% → 14.38% (+0.50pp)	11.99% → 12.42% (+0.43pp)
Prime	USDT	93.8%	8.62% → 9.12% (+0.50pp)	7.28% → 7.70% (+0.42pp)
Global Dollar	USDC	90.3%	3.92% → 4.41% (+0.49pp)	3.19% → 3.59% (+0.40pp)
Global Dollar	USDT	50.9%	2.21% → 2.49% (+0.28pp)	1.01% → 1.14% (+0.13pp)
Core	WETH	92.1%	2.48% → 2.33% (-0.15pp)	1.94% → 1.82% (-0.12pp)