Summary
LlamaRisk recommends the following parameter changes based on user behavior, on-chain liquidity, and position health observed in the latest review of Aave V3 reserves.
Aave V3 Core, Aave V3 Plasma, Aave V3 Monad, Aave V3 Mantle, and Aave V3 Avalanche:
- Increase baseVariableBorrowRate for USDe from 3.00% to 4.00%.
Aave V3 X Layer:
- Increase supply cap for PT-USDG-29OCT2026 from 35,000,000 to 70,000,000.
- Reduce variableRateSlope1 for USD₮0 from 5.00% to 4.50%.
- Reduce variableRateSlope1 for USDG from 5.00% to 4.50%.
PT-USDG-29OCT2026 (Aave V3 X Layer)
PT-USDG-29OCT2026 sits at 81.4% supply cap utilization (28,475,365 / 35,000,000). The reserve is collateral-only and is enabled in E-Mode category 7, PT-USDG Stablecoins, at 92.66% LTV and 94.66% LT, and in E-Mode category 8, PT-USDG USDG, at 93.59% LTV and 95.59% LT.
Supply Distribution
Source: LlamaRisk, September 4, 2026
The top twenty suppliers hold 99.5% of the reserve, with fourteen carrying outstanding debt and six supplying on a spot basis. The debt-carrying suppliers have health factors between 1.01 and 1.22, with a median of 1.06. Borrowing is denominated in USD₮0, followed by USDG, against PT collateral held in the isolated PT E-Mode categories, so the cohort holds stablecoin debt against a stablecoin-denominated PT whose health factor tracks the PT’s discount to par rather than a directional price. Supply is concentrated, with the largest position holding 27.2% of the reserve and the top five holding 82.2%.
Exit Liquidity
The primary trading venue is the Pendle AMM pool on X Layer, which holds $4.68M in total liquidity, composed 88% SY / 12% PT. The PT trades at a 0.48% discount to par with an implied yield of 3.28% and 55 days to maturity. USDG secondary market liquidity on X Layer adds approximately $17.3M across DEX pools, with the deepest pair, USDG/USD₮0, holding $5.1M. Liquidations therefore route PT into USDG on Pendle and USDG into other stablecoins on the DEX pools, and the near-term maturity bounds residual risk to the redemption window, where USDG is redeemable 1:1 at par.
The proposed cap of 70,000,000 is approximately 2.46x the current outstanding supply, resulting in approximately 40.7% post-change cap utilization.
USDe Interest Rate Model
The recommendation raises the USDe base rate by 100 BPS on all five deployments that carry USDe, continuing the base rate program in the stablecoin interest rate changes proposed by TokenLogic, which prices USDe borrowing in line with Ethena’s native staking rate. Slope1 is unchanged on every reserve.
| Instance | Utilization | uOptimal | Current Borrow APR | New Borrow APR | Delta |
|---|---|---|---|---|---|
| Aave V3 Core | 48.9% | 90.0% | 4.63% | 5.63% | +100 BPS |
| Aave V3 Plasma | 37.1% | 85.0% | 4.75% | 5.75% | +100 BPS |
| Aave V3 Monad | 25.0% | 90.0% | 4.11% | 5.11% | +100 BPS |
| Aave V3 Mantle | 15.7% | 85.0% | 3.74% | 4.74% | +100 BPS |
| Aave V3 Avalanche | 65.0% | 80.0% | 5.44% | 6.44% | +100 BPS |
Because the optimal utilization point and both slopes are unchanged on all five reserves, the share of supply held as withdrawal liquidity at that point is unchanged, and the borrowable capacity below the optimal point is unchanged. The recommendation raises the price of USDe borrowing without altering the quantity available.
X Layer Stablecoin Slope1 Reductions
The recommendation reduces Slope1 from 5.00% to 4.50% on the two borrowable stablecoin reserves that fund the yield-bearing collateral strategies on the market. The top PT-USDG-29OCT2026 suppliers borrow USD₮0 and USDG against PT collateral carrying a fixed implied yield of approximately 3.3%, and at the current 5.00% Slope1 the borrow rate at the optimal utilization point sits 170 BPS above that yield. The reduction aligns the reserves with these strategies, bringing the USD₮0 borrow rate at current utilization to approximately the PT implied yield. The base rate, the optimal utilization point, and Slope2 are unchanged on both reserves.
| Instance | Asset | Utilization | uOptimal | Current Borrow APR | New Borrow APR | Delta |
|---|---|---|---|---|---|---|
| Aave V3 X Layer | USD₮0 | 66.7% | 90.0% | 3.70% | 3.33% | -37 BPS |
| Aave V3 X Layer | USDG | 72.1% | 80.0% | 4.51% | 4.06% | -45 BPS |
Because Slope2 and the optimal utilization point are unchanged, the rate response above the optimal point shifts down by the same 50 BPS, and the incentive to repay or supply during a liquidity squeeze is preserved.
Specification
Caps
| Instance | Asset | Current Supply Cap | Recommended Supply Cap |
|---|---|---|---|
| Aave V3 X Layer | PT-USDG-29OCT2026 | 35,000,000 | 70,000,000 |
USDe
| Instance | Asset | Current Base Variable Rate | Recommended Base Variable Rate |
|---|---|---|---|
| Aave V3 Core | USDe | 3.00% | 4.00% |
| Aave V3 Plasma | USDe | 3.00% | 4.00% |
| Aave V3 Monad | USDe | 3.00% | 4.00% |
| Aave V3 Mantle | USDe | 3.00% | 4.00% |
| Aave V3 Avalanche | USDe | 3.00% | 4.00% |
Slope 1
| Instance | Asset | Current Slope 1 | Recommended Slope 1 |
|---|---|---|---|
| Aave V3 X Layer | USD₮0 | 5.00% | 4.50% |
| Aave V3 X Layer | USDG | 5.00% | 4.50% |
Next Steps
We will move forward and implement these updates via the Risk Steward process.
Disclosure
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.