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 Monad:
- Increase supply cap for USDC from 250,000,000 to 350,000,000.
- Increase borrow cap for USDC from 225,000,000 to 315,000,000.
Aave V3 Core:
- Reduce supply cap for USDtb from 302,000,000 to 100,000,000.
- Reduce borrow cap for USDtb from 182,000,000 to 50,000,000.
- Reduce supply cap for LDO from 2,000,000 to 1.
- Reduce supply cap for tETH from 1,000 to 300.
Aave V3 Prime:
- Reduce supply cap for tETH from 22,000 to 15,000.
Stablecoin IRM:
- Increase Slope1 by 10 bps across V3 stablecoin reserves.
USDC (Aave V3 Monad)
USDC is currently at 90.0% supply cap utilization and 93.5% borrow cap utilization on the Aave V3 Monad instance.
Supply Distribution
Source: LlamaRisk, October 13, 2026
The top suppliers hold USDC without outstanding debt. Supply is concentrated, with the largest position accounting for 25.2% of supply, the top three for 51.0%, and the top five for 57.6%.
Borrow Distribution
Source: LlamaRisk, October 13, 2026
The top USDC borrowers run health factors between 1.01 and 1.05 with a median of 1.02, and borrowing is concentrated in the largest position. Collateral behind these positions is entirely stablecoin-denominated, with USDe and syrupUSDC the largest by value, syrupUSDC the most widely held, and PT-AUSD-17DEC2026 in a minority of positions.
Recommendation
We recommend raising the supply cap from 250M to 350M and the borrow cap from 225M to 315M on Aave V3 Monad, which places the reserve at approximately 64.3% post-change supply cap utilization and 66.8% post-change borrow cap utilization.
Cap Reductions
- USDtb on Aave V3 Core sits at 4.3% supply cap utilization and 5.8% borrow cap utilization, with supply down approximately 17% over the past 30 days. The asset is not enabled as collateral, so the reserve serves as a lending market only. The proposed caps of 100M supply and 50M borrow land at approximately 12.9% and 21.2% post-change cap utilization.
- LDO on Aave V3 Core carries an LTV of 0, so it no longer provides borrowing power for new positions, and borrowing of LDO is disabled. The reserve holds approximately 718.6K LDO against a 2M supply cap (35.9% utilization), reflecting limited adoption. To complete the deprecation of the reserve, the proposed supply cap of 1 closes new deposits, while existing suppliers retain the ability to withdraw and existing positions are otherwise unaffected.
- tETH on Aave V3 Core sits at 28.7% supply cap utilization, with supply broadly unchanged over the past 30 days, and the asset counts as collateral only within E-Mode. The proposed cap of 300 lands at approximately 95.6% post-change cap utilization.
- tETH on Aave V3 Prime sits at 69.0% supply cap utilization (15,189 / 22,000). Supply is held within E-Mode as collateral against wstETH debt, in a looped position structure, and is highly concentrated. The proposed cap of 15,000 sits slightly below current outstanding supply.
Stablecoin Slope1 Increases
The recommendation raises Slope1 by 10 BPS, from 4.40% to 4.50%, on stablecoin reserves across Aave V3, and by 5 BPS, from 4.70% to 4.75%, on USDC on Aave V3 Base, continuing the stablecoin interest rate changes proposed by TokenLogic.
| Instance | Asset | Utilization | uOptimal | Current Borrow APR | New Borrow APR | Delta |
|---|---|---|---|---|---|---|
| Aave V3 Core | USDC | 93.5% | 94.0% | 4.38% | 4.48% | +10 BPS |
| Aave V3 Core | USDT | 86.7% | 94.0% | 4.06% | 4.15% | +9 BPS |
| Aave V3 Plasma | USDT0 | 93.6% | 94.0% | 4.38% | 4.48% | +10 BPS |
| Aave V3 Base | USDC | 90.7% | 90.0% | 5.43% | 5.48% | +5 BPS |
| Aave V3 Arbitrum | USD₮0 | 86.2% | 90.0% | 4.22% | 4.32% | +10 BPS |
| Aave V3 Avalanche | USDC | 92.8% | 90.0% | 7.18% | 7.28% | +10 BPS |
| Aave V3 Avalanche | USDt | 88.1% | 90.0% | 4.31% | 4.41% | +10 BPS |
| Aave V3 MegaETH | USDm | 92.4% | 90.0% | 6.84% | 6.94% | +10 BPS |
| Aave V3 BNB Chain | USDC | 84.9% | 90.0% | 4.15% | 4.24% | +9 BPS |
| Aave V3 BNB Chain | USDT | 81.5% | 90.0% | 3.99% | 4.08% | +9 BPS |
| Aave V3 Gnosis | USDC.e | 88.4% | 90.0% | 4.32% | 4.42% | +10 BPS |
| Aave V3 Optimism | USDT | 87.9% | 90.0% | 4.30% | 4.40% | +10 BPS |
| Aave V3 Linea | USDC | 89.5% | 90.0% | 4.38% | 4.48% | +10 BPS |
| Aave V3 Linea | USDT | 89.3% | 90.0% | 4.37% | 4.47% | +10 BPS |
These reserves carry approximately 5.82B in aggregate debt, and most run close to their optimal utilization, as shown in the table. Because Slope2 and the optimal utilization point are unchanged, the rate response above the optimal point shifts up by the same amount as Slope1, and the incentive to repay or supply during a liquidity squeeze is preserved.
Specification
Supply Caps
| Instance | Asset | Current Supply Cap | Recommended Supply Cap |
|---|---|---|---|
| Aave V3 Monad | USDC | 250,000,000 | 350,000,000 |
| Aave V3 Core | USDtb | 302,000,000 | 100,000,000 |
| Aave V3 Core | LDO | 2,000,000 | 1 |
| Aave V3 Core | tETH | 1,000 | 300 |
| Aave V3 Prime | tETH | 22,000 | 15,000 |
Borrow Caps
| Instance | Asset | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|
| Aave V3 Monad | USDC | 225,000,000 | 315,000,000 |
| Aave V3 Core | USDtb | 182,000,000 | 50,000,000 |
Slope 1
| Instance | Asset | Current Slope 1 | Recommended Slope 1 |
|---|---|---|---|
| Aave V3 Core | USDC | 4.40% | 4.50% |
| Aave V3 Core | USDT | 4.40% | 4.50% |
| Aave V3 Plasma | USDT0 | 4.40% | 4.50% |
| Aave V3 Base | USDC | 4.70% | 4.75% |
| Aave V3 Arbitrum | USD₮0 | 4.40% | 4.50% |
| Aave V3 Avalanche | USDC | 4.40% | 4.50% |
| Aave V3 Avalanche | USDt | 4.40% | 4.50% |
| Aave V3 MegaETH | USDm | 4.40% | 4.50% |
| Aave V3 BNB Chain | USDC | 4.40% | 4.50% |
| Aave V3 BNB Chain | USDT | 4.40% | 4.50% |
| Aave V3 Gnosis | USDC.e | 4.40% | 4.50% |
| Aave V3 Optimism | USDT | 4.40% | 4.50% |
| Aave V3 Linea | USDC | 4.40% | 4.50% |
| Aave V3 Linea | USDT | 4.40% | 4.50% |
Next Steps
We will move forward and implement these updates via the Risk Steward process. The implemented changes can be reviewed on the LlamaRisk Risk Stewards Dashboard.
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.