Summary
LlamaRisk supports onboarding USDe to the Aave V3 X Layer instance, contingent on bootstrapping sufficient DEX liquidity to provide a reliable local exit venue for liquidators. At present, no local DEX liquidity is available on X Layer, leaving liquidators dependent on off-chain or cross-chain exit routes. The team is expected to supply $5M in DEX liquidity before launch in the coming days, addressing this key launch prerequisite. USDe is already listed on multiple Aave markets, including V3 and V4. Native USDe minting is not available on X Layer, and USDe is instead bridged using LayerZero’s Omnichain Fungible Token (OFT) standard, with backing escrowed on Ethereum.
On the access control side, the USDe OFT on X Layer is controlled by a custom timelock controller with a 24-hour delay, which maintains a whitelist allowing certain functions to bypass the delay. Currently, setPeer is whitelisted for the Ethena 5/10 multisig, allowing it to add or remove peers from the OFT mesh without a delay. A separate pauser mechanism for incident response currently doesn’t exist. Timelock coverage now extends to 16 of the 34 networks, and remains absent on Solana and TON, the two largest balances outside Ethereum.
The full assessment can be found in its corresponding thread.
Aave V3 Specific Parameters
| Parameter | Recommendation |
|---|---|
| Borrowable | Yes |
| Collateral Enabled | No |
| Supply Cap | 100,000,000 |
| Borrow Cap | 20,000,000 |
| LTV | 0% |
| LT | 0% |
| Liquidation Bonus | 0% |
| Liquidation Protocol Fee | 10% |
| Reserve Factor | 25% |
| Base Variable Borrow Rate | 6.30% |
| Variable Slope 1 | 0.25% |
| Variable Slope 2 | 45% |
| Uoptimal | 85% |
| Flashloan Enabled | Yes |
| E-Modes | 1, 2, 3, 4, 9 |
E-Mode
We recommend adding USDe as borrowable under the following existing E-Modes on X Layer.
| Category id | E-Mode |
|---|---|
| 1 | xBTC__Stablecoins |
| 2 | xETH__Stablecoins |
| 3 | xSOL__Stablecoins |
| 4 | WOKB__Stablecoins |
In addition we recommend creating a USDe Stablecoin E-Mode #9 as follows:
| Parameter | Category |
|---|---|
| Isolated | No |
| LTV | 91% |
| LT | 93% |
| Liquidation Bonus | 2% |
| Asset | USDe | USDT0 | USDC | GHO | USDG |
|---|---|---|---|---|---|
| Collateral | Yes | No | No | No | No |
| Borrowable | No | Yes | Yes | Yes | Yes |
Price feed Recommendation
We recommend pricing USDe using the Capped USDT/USD feed on X Layer, consistent with the approach adopted across all Aave instances for USDe-denominated assets. The adapter caps the reported price at $1.04 and is already in use for the USDT0 reserve on this instance.
Disclaimer
This review was independently prepared by LlamaRisk, a community-led decentralized organization funded in part by the Aave DAO. LlamaRisk serves as an independent attestor of Ethena’s PoR solution. LlamaRisk did not receive 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.