Summary
LlamaRisk supports adding Tether America USD (USAT) to the Main Spoke of the Aave V4 Core Hub on Avalanche as a borrow-only reserve priced at a hardcoded $1. USAT on Avalanche is a bridged representation of the stablecoin Anchorage Digital Bank, N.A. issues on Ethereum, so its value, redemption and credit exposure rest with Anchorage on Ethereum. The Avalanche token has zero supply and no trading venue. The main risks are an uncapped owner mint alongside the LayerZero bridge, a bridge route that is not yet live and fails 3 of 4 bridge standards, no client mint or redemption on Avalanche, and every privileged role held by one 3-of-5 multisig with no timelock.
Bridged supply is bounded by the Ethereum adapter’s escrow, but the owner’s direct mint on Avalanche has no cap or rate limit. Holders who are not Anchorage clients exit through a DEX pool that does not exist yet, or over the bridge to the single Curve USAT/USDT pool on Ethereum. For a borrow-only reserve the binding stress is a market price above par, when borrowers must source USAT to repay, and until Anchorage enables Avalanche for its clients new supply comes only from the owner’s mint or the bridge. The same 3 keys control the token, upgrades and bridge configuration on all 3 chains, and can blocklist the Hub and burn its USAT balance. The bug bounty’s published scope names no Avalanche contract. With a zero collateral factor and a fixed price, a depeg moves no health factor. The Avalanche token and bridge code carry 2026 audits by Guardian and OpenZeppelin, and messages received on Avalanche need 3 required verifiers over pinned libraries.
The add cap is 60M USAT and the draw cap 55M USAT, provided $5M of DEX liquidity is seeded on Avalanche. The Ethereum to Avalanche route carries no rate limit, and Tether is asked to add one within one month of onboarding. Caps are reassessed when Anchorage enables Avalanche for client mint and redemption, or when a bridge rate limit is verified on-chain. Collateral enablement requires a Chainlink USAT/USD feed on Avalanche.
The full assessment is in its corresponding thread.
Aave V4 Specific Parameters
We recommend adding USAT to the Main Spoke of the Aave V4 Core Hub on Avalanche as a borrow-only reserve, with collateral status withheld and no credit line extended from another hub. Parameters mirror USDT on the Avalanche Core Hub, with collateral disabled. The add cap is 60,000,000 USAT and the draw cap 55,000,000 USAT, provided $5M of DEX liquidity is seeded on Avalanche.
Spoke Parameters
| Hub |
Spoke |
Reserve |
Collateral Factor |
Max Liquidation Bonus |
Borrowable |
Collateral Risk |
Liquidation Fee |
riskPremiumThreshold |
receiveShares |
| Avalanche Core |
Main |
USAT |
0.00% |
- |
TRUE |
- |
- |
0% |
TRUE |
| Avalanche Core |
Ethena Ecosystem |
USAT |
0.00% |
- |
TRUE |
- |
- |
1100% |
TRUE |
Add and Draw Caps
| Hub |
Spoke |
Reserve |
Add Cap |
Draw Cap |
| Avalanche Core |
Main |
USAT |
60,000,000 |
5,000,000 |
| Avalanche Core |
Ethena Ecosystem |
USAT |
0 |
50,000,000 |
| Avalanche Core |
Core Tokenized USAT Spoke |
USAT |
1,500,000 |
0 |
Interest Rate Model
| Hub |
Reserve |
Optimal Usage Ratio |
Base Drawn Rate |
Rate Growth Before Optimal |
Rate Growth After Optimal |
Liquidity Fee |
| Avalanche Core |
USAT |
94% |
0% |
4.9% |
20% |
10% |
Oracle
We recommend listing USAT against a hardcoded $1 price adapter returning 1e8 at 8 decimals, registered in the Main Spoke oracle. Chainlink publishes no USAT/USD aggregator on Avalanche, and as a borrow-only reserve USAT enters health factors only as debt. A market premium on Avalanche raises what a borrower or liquidator pays to repay USAT debt without moving any health factor. Collateral enablement requires a robust Chainlink USAT/USD feed on Avalanche.
Changelog
2026-10-27: Added the Core Tokenized USAT Spoke with a 1,500,000 USAT add cap and 0 draw cap.
2026-10-29: Set the USAT riskPremiumThreshold on the Main Spoke to 0%, in line with USDT on the Main Spoke.
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.