LlamaRisk supports the proposal to increase the wrsETH supply cap to 70,000 on the Aave V3 Linea market.
Reasoning
High Demand: The current supply caps are consistently full, indicating strong, unmet user demand. Raising the cap is a necessary step to meet user demand.
Low-Risk Usage: As mentioned by @ChaosLabs, the vast majority of wrsETH is supplied to borrow WETH in E-Mode. Due to the high correlation between wrsETH and WETH, this strategy presents a limited liquidation risk.
Stable Peg: The asset has demonstrated a healthy and reliable peg on Linea. Arbitrage between Linea and Ethereum Mainnet appears efficient, ensuring the Linea price does not deviate significantly.
The chart below illustrates this stability, showing the wrsETH price on Linea closely tracking the price on Ethereum Mainnet. This tight correlation is a strong positive signal for the asset’s health as collateral.
Chart: wrsETH/WETH price on Ethereum Mainnet (Candlesticks) vs. Linea (Orange Line).
Source: Dexscreener, September 5th, 2025.
Recommendation
Given the strong demand and low-risk user behavior, we are confident the Aave Linea market can safely accommodate the proposed increase.
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.