Summary
This proposal is a continuation of the Aave V3 Multichain Strategy - Phase 1, accelerated for the Scroll instance due to a rapid deterioration of on-chain liquidity and TVL. Following the Risk Stewards cap reduction executed on April 10, 2026, this proposal completes the deprecation of Aave V3 on Scroll by freezing all assets and increasing the reserve factor on select assets.
Motivation
Scroll network activity has declined significantly following ether.fi’s announcement to migrate its credit card and cash product to OP Mainnet. Over the past seven days, total value locked on Scroll dropped from approximately $227M to $23.3M, stablecoin market capitalization decreased from $55M to $14M, and daily DEX volume consolidated under $200K.
As of April 10, 2026, the Aave V3 Scroll instance has a total market size of $12.19M, with $4.89M in borrows and $7.30M in available liquidity. The market has already been operating under conservative parameters, including a 50% reserve factor.
Chainlink has confirmed that there is no degradation in their price feeds for Scroll, though they are observing increased network fees.
Supply and borrow caps for all assets were already reduced to 1 via Risk Stewards, preventing any new exposure. This AIP proceeds with the next steps of the deprecation process, consistent with the approach taken for Soneium, Metis, and ZKsync under Proposal 451.
Specification
Freeze All Reserves
All reserves on Aave V3 Scroll will be frozen:
| Instance | Asset |
|---|---|
| Scroll | WETH |
| Scroll | weETH |
| Scroll | USDC |
| Scroll | wstETH |
| Scroll | SCR |
Reserve Factor Increase
The reserve factor is increased from 50% to 85% for the following assets, to make supplying less attractive and encourage position unwinding:
| Instance | Asset | Current RF | Recommended RF |
|---|---|---|---|
| Scroll | weETH | 50% | 85% |
| Scroll | USDC | 50% | 85% |
| Scroll | wstETH | 50% | 85% |
| Scroll | SCR | 50% | 85% |
WETH is excluded from the reserve factor increase. Approximately 90% of outstanding borrows are in WETH, primarily driven by LST looping strategies operating at very low health factors (1.00-1.05). The WETH supply side is already highly utilized (~72% with 90% uOpt), and lowering supply APR could trigger withdrawals, indirectly pushing up borrow rates and stressing these leveraged positions.
The remaining ~10% of borrows are in USDC, mostly backed by WETH (~80%), with relatively safer HF levels (>1.5). No immediate interest rate adjustments are proposed at this stage. However, if positions do not unwind organically over the next period, changes to interest rate parameters may be considered in a subsequent governance action to facilitate their gradual reduction.
Next Steps
Using the Direct-to-AIP process, submit AIP for vote.
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.