# \[Direct to AIP\] Raise sUSDe and USDe November expiry PT tokens caps on Aave V3 Core Instance **URL:** \ **Category:** Governance\ **Created:** [September 12, 2025, 6:55pm UTC](https://governance.aave.com/t/direct-to-aip-raise-susde-and-usde-november-expiry-pt-tokens-caps-on-aave-v3-core-instance/23117 "2025-09-12T18:55:29Z")\ **Posts on this page:** 6\ **Page:** 1
**Author:** ![MarcZeller](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/marczeller/32/7124_2.png) [@MarcZeller](https://governance.aave.com/u/MarcZeller)\ **Post date:** [September 12, 2025, 6:55pm UTC](https://governance.aave.com/t/direct-to-aip-raise-susde-and-usde-november-expiry-pt-tokens-caps-on-aave-v3-core-instance/23117/1 "2025-09-12T18:55:29Z")
* * * > Proposal updated with Risk Parameters by Risk Service Providers 2025-09-16 Title: [Direct to AIP] Raise sUSDe and USDe November expiry PT tokens caps on Aave V3 Core Instance Author: ACI Date: 2025-09-12 * * * ### **Summary** This ARFC proposes to increase supply caps on sUSDe November expiry PT tokens on Aave V3 Core Instance in anticipation of the PT rollover in September. This proposal will be a Direct to AIP. ### **Motivation** The previous sUSDe PT tokens that were onboarded have brought significant inflows to Aave, in preparation for the expiry and rollover we propose to onboard the next expiry of this PT token. We expect at a minimum that deposits will match those in the September expiry PT token, with sidelined demand. Current caps will not be able to allow for a full rollover of PT tokens in Aave to later the November expiry. This proposal suggests to raise caps accordingly to allow for a seamless transition for Aave users and mitagate capital flowing to Aave alternatives. ### **Specification** PT-sUSDE-27NOV2025: [https://etherscan.io/address/0xe6a934089bbee34f832060ce98848359883749b3](https://etherscan.io/address/0xe6a934089bbee34f832060ce98848359883749b3) PT-USDe-27NOV2025 [https://etherscan.io/address/0x62C6E813b9589C3631Ba0Cdb013acdB8544038B7](https://etherscan.io/address/0x62C6E813b9589C3631Ba0Cdb013acdB8544038B7) ### Risk Parameters Increase sUSDe November PT Supply Cap to $1.2b. Increase USDe November PT Supply cap to $1b. | Asset | Chain | Current Supply Cap | Recommended Supply Cap | | --- | --- | --- | --- | | PT\_sUSDe\_27NOV2025 | Ethereum | 300,000,000 | 1,200,000,000 | | PT\_USDe\_27NOV2025 | Ethereum | 200,000,000 | 1,000,000,000 | | Asset | Chain | Current Slope 2 | Recommended Slope 2 | | --- | --- | --- | --- | | USDe | Ethereum | 50% | 30% | ### **Useful Links** [https://docs.pendle.finance/ProtocolMechanics/YieldTokenization/PT](https://docs.pendle.finance/ProtocolMechanics/YieldTokenization/PT) ### Disclaimer ACI is not directly affiliated with Pendle and did not receive compensation for the creation of this proposal. Some ACI employees may hold Pendle tokens. ### **Next Steps** 1. Publish proposal to gather community and Service Providers feedback. 2. Publish an AIP vote for final confirmation and enforcement of the proposal. ### Copyright Copyright and related rights waived under [CCO](https://creativecommons.org/publicdomain/zero/1.0/) ---
**Author:** ![Nandy.eth](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/nandy.eth/32/5612_2.png) [@Nandy.eth](https://governance.aave.com/u/Nandy.eth)\ **Post date:** [September 13, 2025, 11:18am UTC](https://governance.aave.com/t/direct-to-aip-raise-susde-and-usde-november-expiry-pt-tokens-caps-on-aave-v3-core-instance/23117/2 "2025-09-13T11:18:40Z")
AIP have been [published](https://vote.onaave.com/proposal/?proposalId=376&ipfsHash=0x126974bde627cbc93918a913845077a08ec78ae04bdf49d5da15b41478e157b4) and will be open to vote Sep 14, 2025 12:43 PM ---
**Author:** ![ChaosLabs](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/chaoslabs/32/6850_2.png) [@ChaosLabs](https://governance.aave.com/u/ChaosLabs)\ **Post date:** [September 15, 2025, 8:04pm UTC](https://governance.aave.com/t/direct-to-aip-raise-susde-and-usde-november-expiry-pt-tokens-caps-on-aave-v3-core-instance/23117/3 "2025-09-15T20:04:08Z")
## Overview Chaos Labs supports the proposal to increase supply caps of Ethena’s November PT expiries on Aave V3’s Core Instance. However, we do note some concerns regarding the available liquidity on the market and recommend a cautious approach going forward. Additionally, we recommend decreasing the Slope 2 of USDe prior to the increase of the supply caps in order to minimize the borrow rate volatility of the asset. ## Motivation The PT-sUSDe and PT-USDe November expiries’ initial supply caps have been determined within their respective initial listing proposals ([PT-USDe](https://governance.aave.com/t/direct-to-aip-onboard-usde-november-expiry-pt-tokens-on-aave-v3-core-instance/23013), [PT-sUSDe](https://governance.aave.com/t/direct-to-aip-onboard-susde-november-expiry-pt-tokens-on-aave-v3-core-instance/22894)); those listing recommendations were made prior to our coordination plan, outlined with Ethena, regarding its Aave-related prevention of system-wide risk and Aave market disruption. Specifically, we outlined a framework in which USDe’s backing supplied into Aave functions as “last capital standing” capital while whitelisting Aave as USDe redeemer in order to enable internalized liquidations of Ethena’s collateral in cases of adverse scenarios, as detailed in the original post [here](https://governance.aave.com/t/strengthening-stability-between-aave-and-ethena-redemption-priority-and-protocol-safeguards/23027). These changes significantly improve Ethena’s collateral risk profile and enable us to support increased exposure to the PT assets mentioned. Our recent research paper, “[Stress Testing Ethena: A Quantitative Look at Protocol Stability](https://cdn.sanity.io/files/zmh9mnff/production/af14f68eb1f5ff8e3c9f6c1993907226dc30ad3a.pdf),” further examines how rapidly growing deposits of Ethena’s USDe, sUSDe and especially Pendle Principal Tokens are reshaping Aave’s collateral pool and funding dynamics. It maps out both on‑chain liquidity hazards (e.g., thin PT markets, leveraged looping, rehypothecation) and backing‑side tail risks (exchange or custodian failure, collateral de‑peg, prolonged negative funding) via scenario modeling and Monte‑Carlo simulations, while proving that Aave’s current risk‑oracle floors, eMode parameterization and liquidation controls would absorb most plausible shocks. And, “[Aave’s Growing Exposure to Ethena: Risk Implications Throughout the Growth and Contraction Cycles of USDe](https://governance.aave.com/t/aave-s-growing-exposure-to-ethena-risk-implications-throughout-the-growth-and-contraction-cycles-of-usde/22791) ,” shows that contraction and stabilization dynamics within the Aave-Ethena ecosystem are closely linked. When sUSDe yields decline, leveraged positions unwind, freeing up significant stablecoin liquidity in Aave through repayments. Simultaneously, PT/USDe borrowers shift their debt into other stablecoins, generating upward price pressure on USDe precisely when redemption demand rises. Crucially, stablecoin repayments from leverage unwinders typically outweigh PT debt migration into stablecoins, creating a natural liquidity buffer. Our analysis indicates this dynamic effectively stabilizes Aave markets, comfortably absorbing potential stress even during Ethena’s withdrawal of backing assets. Additionally, since our initial recommendations were published, a significant gap of time passed before listings went live, effectively reducing their distance to time of maturity by roughly one third for the upcoming November PTs and, by extension, reducing their duration risk further. As PTs approach maturity, their price sensitivity to rate shocks compresses non-linearly, reducing price risk for loopers and liquidity constraints for liquidations. This materially improves the risk-reward of facilitating supply caps increases now versus at listing, as the shorter remaining term lowers the probability-weighted loss in stress and narrows basis volatility of the PTs. Liquidity conditions have also strengthened meaningfully. sUSDe PT now benefits from approximately $45 million of concentrated LP depth. In parallel, Ethena is directing additional incentives toward the USDe PT pool, and we expect that LP to scale rapidly in the near term, with a reasonable base case of reaching around $30 million within the next week. We note, however, that available stablecoin supply on Aave is currently constrained at roughly $1.0 billion across major reserves (about $510 million USDT, $370 million USDC, and $120 million USDe) prior to surpassing their UOptimal point. If the new PT caps were to be rapidly utilized, the associated loop financing could create up to $1.8 billion in incremental stablecoin demand during the deposit window, which may induce short-term spikes in stablecoin borrow rates. To minimize this transitory volatility and protect user experience, we recommend a temporary, 20% reduction in USDe’s Slope2. Smoothing the tail of the IR curve during the expected deposit surge reduces the risk of rate volatility and discourages reflexive deleveraging, while an adjustment to the interest curve back to its current value can be performed once the rollover normalizes, if necessary. Finally, we do not expect the proposed caps to be filled immediately. Pendle-side liquidity to acquire PTs remains finite; as buy pressure increases during the rollover, implied PT yields should mechanically compress. That rate compression is a natural stabilizer: once PT yields fall, the incremental carry from looping on Aave becomes less attractive relative to financing costs, which should slow the pace of cap utilization. ## Specifications | Asset | Chain | Current Supply Cap | Recommended Supply Cap | | --- | --- | --- | --- | | PT\_sUSDe\_27NOV2025 | Ethereum | 300,000,000 | 1,200,000,000 | | PT\_USDe\_27NOV2025 | Ethereum | 200,000,000 | 1,000,000,000 | | Asset | Chain | Current Slope 2 | Recommended Slope 2 | | --- | --- | --- | --- | | USDe | Ethereum | 50% | 30% | # **Disclaimer** Chaos Labs has not been compensated by any third party for publishing this recommendation. # **Copyright** Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain) ---
**Author:** ![LlamaRisk](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/llamarisk/32/12865_2.png) [@LlamaRisk](https://governance.aave.com/u/LlamaRisk)\ **Post date:** [September 16, 2025, 2:48pm UTC](https://governance.aave.com/t/direct-to-aip-raise-susde-and-usde-november-expiry-pt-tokens-caps-on-aave-v3-core-instance/23117/4 "2025-09-16T14:48:18Z")
### Summary We support the underlying motivation to facilitate a smooth rollover for users from the September expiry and retain capital within the Aave ecosystem. However, our analysis indicates that the timing of this implementation presents a significant, albeit temporary, risk of a liquidity crunch that would negatively impact all stablecoin borrowers. We therefore recommend enacting this AIP around the September PT maturity on September 25, 2025. ### Analysis of Current Market Conditions As noted in the analysis by @ChaosLabs, the available stablecoin liquidity on Aave before reaching Uoptimal is currently constrained. A rapid influx of demand to fill the newly proposed cap space (~$1.6B between the two assets) would push utilization for all major stablecoins beyond the Uoptimal utilization. To quantify the potential impact, we modeled a scenario where $1.6B of new stablecoin demand is introduced into the market before the September PTs mature. Around $3.5B of liquidity is freed up. Our equilibrium model calculates the borrow APR at which this new demand would be distributed across USDT, USDC, and USDe. The results show a sharp, system-wide increase in borrowing costs: > ### Equilibrium Analysis Results > > New Demand: $1.60B > > Equilibrium APR: 15.586% > | Asset | New Demand ($M) | Utilization (%) | Borrow Rate (%) | > | --- | --- | --- | --- | > | USDT | 791.39 | 86.54% → 97.19% | 6.11% → 15.59% | > | USDC | 699.38 | 83.92% → 95.63% | 5.93% → 15.59% | > | USDe | 109.23 | 84.62% → 91.62% | 7.05% → 15.59% | An equilibrium borrow rate of ~15.6% represents a significant short-term shock to the market. This rate would affect all borrowers, not just those looping PTs, potentially forcing deleveraging across the protocol. The following charts illustrate the sensitivity of each stablecoin’s borrow rate to new demand under current liquidity conditions. The Equilibrium Point marks the demand level and rate calculated in our model. We have also added a more conservative estimate of the demand, showing the profitability frontier for the new November PTs, currently at 9%. ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/6/6f5e5dc7b9323e00f8d3919be790e045298a0c4f.png) Source: LlamaRisk, 16 September 2025 ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/a/af830fa336ea247257217cb3073eaddf12d8a973.png) Source: LlamaRisk, 16 September 2025 ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/0/054f51b42b2d09e7e21fe8346e78f70e665e3744.png) Source: LlamaRisk, 16 September 2025 ### USDe Slope2 Changes Lowering the `Slope2` from 50% to 30% is a prudent change. By flattening the Slope2, we help mitigate the risk of extreme rate volatility, protecting Aave users. ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/6/6ebb5889df53a6eb4a7780b5121b765330f35bc7.png) Source: LlamaRisk, 16 September 2025 ### Proposed Actions The September PT maturity is only 8 days away, so a brief waiting period is the most prudent course of action. The deleverage of the September maturity is expected to free up substantial stablecoin liquidity, allowing the November PT caps to be increased and filled without causing the severe rate volatility highlighted in our analysis. ### Disclaimer This review was independently prepared by LlamaRisk, a DeFi risk service provider funded in part by the Aave DAO. LlamaRisk serves the Horizon protocol and has been engaged to conduct due diligence, parametrisation, and ongoing risk services. The information provided should not be construed as legal, financial, tax, or professional advice. ---
**Author:** ![myriad](https://avatars.discourse-cdn.com/v4/letter/m/9de0a6/32.png) [@myriad](https://governance.aave.com/u/myriad)\ **Post date:** [September 16, 2025, 3:49pm UTC](https://governance.aave.com/t/direct-to-aip-raise-susde-and-usde-november-expiry-pt-tokens-caps-on-aave-v3-core-instance/23117/5 "2025-09-16T15:49:58Z")
Strong support. This Chaos Labs self-imposed waiting 3 days to increase cap 50 million, then 3 more to increase 100 million, etc. because we’re using an exotic, manual oracle is like shooting yourself in the kneecap, repeatedly, half-way through a marathon when you finally have taken the lead. ---
**Author:** ![system](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/e/e11637c36f45ffa158f2146f5c19438d46e0824d.svg) [@system](https://governance.aave.com/u/system)\ **Post date:** [October 16, 2025, 3:50pm UTC](https://governance.aave.com/t/direct-to-aip-raise-susde-and-usde-november-expiry-pt-tokens-caps-on-aave-v3-core-instance/23117/6 "2025-10-16T15:50:47Z")
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