Summary
LlamaRisk supports the listing of wstLINK on Aave’s Ethereum Core instance with the parameter adjusted to align with the V3.6 update, limiting exposure to the wstLINK/LINK looping use case. Following our initial analysis, no major architectural changes were observed, with notable market risk changes relating to an increase in the protocol’s buffer liquidity and an increased reliance on a single DEX pool.
Additionally, we observed that the staking pool cap has increased at a slower rate than staking demand, with the Priority pool increasing to over $9M in LINK deposits waiting to be staked (up from approximately $3.4M). In contrast, the staking pool capacity has only increased by ~1.3M LINK. stLINK remains volatile but has maintained a strong, correlated relationship with LINK on secondary markets.
In line with the governance adopted stance to minimize exposure to long-tail and volatile collateral assets that generate low protocol revenue relative to their risk exposure, a wstLINK/Stablecoin E-mode is not advised, nor is allowing stablecoin access through general parameter configurations due to the debt risk they introduce.
The wstLINK deployment parameters have been decided jointly with @ChaosLabs.
Liquidity
stLINK liquidity has remained largely unchanged since our initial analysis in May 2025. For a correlated swap, ~$4.7M worth of stLINK (~365K) can be swapped for LINK within a ~2% slippage. Alternatively, approximately 386K stLINK (~$5.3M) can be swapped within a 7% slippage (previously ~316K stLINK, $5M).
Source: DeFiLlama stLINK/LINK, December 15th, 2025
Source: DeFiLlama stLINK/WETH, December 15th, 2025
Available liquidity has declined to a single Curve pool; previously, 2 pools over $1M TVL were available.
Source: stLINK liquidity pools, GeckoTerminal, December 15th, 2025
Liquidity Buffer and Staking Cap
The Priority pool, which serves as a deposit staking queue and liquidity buffer for withdrawals, has increased its available LINK balance to a current total of 704K (~$9.7M). Withdrawals are instant if sufficient liquidity is available; otherwise, withdrawals are processed between 1 and 7 days.
Source: Priority Pool Balance, Dune, December 14th, 2025
Since our initial analysis, pool staking capacity has increased from 4.5M LINK to 5.8M. The increased deposits represent an increase in staking demand, which exceeds staking capacity changes a
Source: stLINK pool info, stake.link, December 19th, 2025.
Volatility
A relatively low secondary market price misalignment was observed between stLINK and the underlying LINK over a 90-day period. Since stLINK will be priced using its internal stLINK/LINK exchange rate, the probability of liquidations will be low.
As shown in the graph below, recurring daily price fluctuations of ~10% were observed.
Source: Coingecko, September 12th to December 11th, 2025
stLINK trades at a consistent slight premium to LINK, the token likely trades higher due to the staking cap limiting access stLINK.
Source: stLINK/LINK Curve pool, GeckoTerminal, December 19th, 2025
Aave V3.6 Specific Parameters
The wstLINK deployment parameters have been decided jointly with @ChaosLabs. The asset should be onboarded to enable a LINK Correlated E-Mode designed for efficient wstLINK yield looping.
Disclaimer
This review was independently prepared by LlamaRisk, a DeFi risk service provider funded in part by the Aave DAO. LlamaRisk is not directly affiliated with the protocol(s) reviewed in this assessment and did not receive any compensation from the protocol(s) or their affiliated entities for this work.
The information provided should not be construed as legal, financial, tax, or professional advice.