Summary
LlamaRisk recommends the following parameter changes based on user behavior, on-chain liquidity, and position health observed in the latest review of Aave V4 reserves.
Aave V4 Ethereum:
- Increase the draw cap for USDC on the Core Hub Main Spoke from 36M to 40M.
- Increase slope1 for USDC on the Core Hub from 5.00% to 5.50%.
- Decrease slope1 for USDC on the Prime Hub from 5.00% to 4.50%.
- Increase the draw cap for USDT on the Core Hub Main Spoke from 15.6M to 20M.
- Increase the draw cap for WETH on the Core Hub EtherFi Spoke from 41.1K to 45K.
- Increase the add cap for weETH on the Core Hub Main Spoke from 22K to 25K.
Aave V4 Avalanche:
- Increase the add cap for USDt on the Core Hub Main Spoke from 60M to 110M.
- Increase the draw cap for USDt on the Core Hub Ethena Ecosystem Spoke from 50M to 100M.
- Increase the add cap for USDe on the Core Hub Ethena Ecosystem Spoke from 60M to 120M.
- Increase the add cap for WAVAX on the Core Hub Main Spoke from 2M to 4M.
Cap Utilization
The chart shows add cap utilization (left) and draw cap utilization (right) for Aave V4 reserves at or above 50% of either cap, split by hub. The draw cap panel excludes cross-hub credit lines, which are draw-only legs through which a spoke borrows from a hub against collateral supplied on another hub.
Source: LlamaRisk, November 3, 2026
USDC (Core Hub)
USDC Main Spoke Borrow Distribution
Source: LlamaRisk, November 3, 2026
USDC borrowing on the Main Spoke is moderately concentrated, with the largest position holding approximately 15% of the drawn amount and the top twenty approximately 60%. The largest borrowers hold USDC debt mainly against ETH-denominated collateral (wstETH, WETH, and weETH) and BTC-denominated collateral (WBTC and cbBTC) at health factors between 1.16 and 3.64 with a median of 1.48, so HF in the cohort tracks the ETH and BTC prices.
Recommendation
As of November 3, 2026, USDC sits at 95.1% draw cap utilization on the Main Spoke (34.25M / 36M). The proposed draw cap of 40M lands at approximately 85.6% post-change draw cap utilization, and the 5.75M of added room is within the 5.94M of USDC liquidity available on the Core Hub.
USDC IRM (Core Hub)
USDC on the Core Hub holds 56.50M added and 50.56M drawn as of November 3, 2026, for a hub utilization of 89.5% against an optimal usage ratio of 92.00%. The proposed change raises slope1 (rateGrowthBeforeOptimal) from 5.00% to 5.50%. The optimal usage ratio (92.00%), base rate (0.00%), and slope2 (20.00%) remain unchanged.
At current hub utilization, the USDC borrow rate moves from 4.86% to 5.35% and the supply APY, after the 10% liquidity fee, from 3.99% to 4.40%. Borrow incentives currently reduce the USDC borrow APR on the Core Hub by 2.00%, so the borrow rate net of incentives moves from 2.86% to 3.35%.
Source: LlamaRisk, November 3, 2026
Recommendation
Increasing slope1 for USDC on the Core Hub from 5.00% to 5.50% raises the supply rate for USDC depositors, while the 2.00% borrow incentive keeps the net borrow rate at 3.35% at current utilization.
USDC IRM (Prime Hub)
USDC on the Prime Hub holds 7.23M added and 6.42M drawn as of November 3, 2026, for a hub utilization of 88.8% against an optimal usage ratio of 92.00%. The proposed change lowers slope1 (rateGrowthBeforeOptimal) from 5.00% to 4.50%. The optimal usage ratio (92.00%), base rate (0.00%), and slope2 (20.00%) remain unchanged.
At current hub utilization, the USDC borrow rate moves from 4.83% to 4.35% and the supply APY, after the 10% liquidity fee, from 3.94% to 3.54%.
Source: LlamaRisk, November 3, 2026
Recommendation
Borrow incentives are not live on the Prime Hub as of November 3, 2026. Decreasing slope1 for USDC from 5.00% to 4.50% reduces the USDC borrow rate at current utilization by 0.48 percentage points.
USDT (Core Hub)
USDT Main Spoke Borrow Distribution
Source: LlamaRisk, November 3, 2026
USDT borrowing on the Main Spoke is moderately concentrated, with the largest position holding approximately 9% of the drawn amount and the top twenty approximately 60%. The largest borrowers hold USDT debt mainly against WETH, WBTC, and wstETH collateral at health factors between 1.30 and 13.32 with a median of 1.73, so HF in the cohort tracks the ETH and BTC prices.
Recommendation
As of November 3, 2026, USDT sits at 92.5% draw cap utilization on the Main Spoke (14.42M / 15.6M). The proposed draw cap of 20M lands at approximately 72.1% post-change draw cap utilization, at which point the 2.34M of USDT liquidity available on the Core Hub, where utilization stands at 90.7% against an optimal usage ratio of 92.00%, becomes the limit on further draws.
WETH (Core Hub)
WETH EtherFi Spoke Borrow Distribution
Source: LlamaRisk, November 3, 2026
WETH borrowing on the EtherFi Spoke is concentrated, with the largest position holding approximately 41% of the drawn amount, the top three approximately 58%, and the top twenty approximately 97%. All top twenty hold WETH debt against weETH collateral at health factors between 1.00 and 1.09 with a median of 1.01, so HF in the cohort tracks the weETH/ETH exchange rate.
Recommendation
As of November 3, 2026, WETH sits at 88.9% draw cap utilization on the EtherFi Spoke (36,550 / 41,100). The proposed draw cap of 45K lands at approximately 81.2% post-change draw cap utilization, at which point the 3,857 WETH of liquidity available on the Core Hub, where utilization stands at 91.2% against an optimal usage ratio of 92.00%, becomes the limit on further draws.
weETH (Core Hub)
weETH Main Spoke Supply Distribution
Source: LlamaRisk, November 3, 2026
weETH supply on the Main Spoke is concentrated, with the largest position holding approximately 26% of the reserve, the top three approximately 64%, and the top twenty approximately 99%. Nineteen of the top twenty borrow stablecoins, mainly USDG and to a lesser extent USDC and frxUSD, against weETH, in some cases alongside WETH and wstETH collateral, at health factors between 1.32 and 28.95 with a median of 1.87, so HF in the cohort tracks the ETH price.
Recommendation
As of November 3, 2026, the weETH add cap on the Main Spoke is 83.5% utilized (18,365 / 22,000). The proposed add cap of 25K lands at approximately 73.5% post-change add cap utilization.
USDt (Avalanche Core Hub)
USDt Main Spoke Supply Distribution
Source: LlamaRisk, November 3, 2026
USDt supply on the Main Spoke is highly concentrated, with the largest position holding approximately 87% of the reserve, the top three approximately 91%, and the top twenty approximately 98%.
USDt Ethena Ecosystem Spoke Borrow Distribution
Source: LlamaRisk, November 3, 2026
USDt borrowing on the Ethena Ecosystem Spoke is highly concentrated, with the largest position holding approximately 94% of the drawn amount and the second largest effectively all of the remainder. Both hold USDt debt against USDe collateral at health factors of 1.06 and 1.00, and since USDe is priced via the USDT/USD feed, the liquidation risk of these positions is low.
Recommendation
As of November 3, 2026, USDt sits at 91.7% add cap utilization on the Main Spoke (55.03M / 60M) and 60.1% draw cap utilization on the Ethena Ecosystem Spoke (30.06M / 50M). The proposed add cap of 110M lands at approximately 50.0% post-change add cap utilization, and the proposed draw cap of 100M at approximately 30.1% post-change draw cap utilization.
USDe (Avalanche Core Hub)
USDe Ethena Ecosystem Spoke Supply Distribution
Source: LlamaRisk, November 3, 2026
USDe supply on the Ethena Ecosystem Spoke is highly concentrated, with the largest position holding approximately 95% of the reserve and the second largest effectively all of the remainder. These are the same two positions that hold the USDt debt on the spoke, at health factors of 1.06 and 1.00.
Recommendation
As of November 3, 2026, the USDe add cap on the Ethena Ecosystem Spoke is 57.0% utilized (34.22M / 60M). The proposed add cap of 120M lands at approximately 28.5% post-change add cap utilization.
WAVAX (Avalanche Core Hub)
WAVAX Main Spoke Supply Distribution
Source: LlamaRisk, November 3, 2026
WAVAX supply on the Main Spoke is highly concentrated, with the largest position holding approximately 64% of the reserve, the top three approximately 86%, and the top twenty approximately 96%. Fifteen of the top twenty borrow stablecoins, mainly USDC and to a lesser extent USDt, against WAVAX, in some cases alongside BTC.b and WETH.e collateral, at health factors between 1.12 and 9.68 with a median of 1.60, so HF in the cohort tracks the AVAX price.
Recommendation
As of November 3, 2026, the WAVAX add cap on the Main Spoke is 92.6% utilized (1.85M / 2M). The proposed add cap of 4M lands at approximately 46.3% post-change add cap utilization.
Specification
Add Caps
| Hub | Spoke | Asset | Current Add Cap | Recommended Add Cap |
|---|---|---|---|---|
| Ethereum Core | Main | weETH | 22,000 | 25,000 |
| Avalanche Core | Main | USDt | 60,000,000 | 110,000,000 |
| Avalanche Core | Ethena Ecosystem | USDe | 60,000,000 | 120,000,000 |
| Avalanche Core | Main | WAVAX | 2,000,000 | 4,000,000 |
Draw Caps
| Hub | Spoke | Asset | Current Draw Cap | Recommended Draw Cap |
|---|---|---|---|---|
| Ethereum Core | Main | USDC | 36,000,000 | 40,000,000 |
| Ethereum Core | Main | USDT | 15,600,000 | 20,000,000 |
| Ethereum Core | EtherFi | WETH | 41,100 | 45,000 |
| Avalanche Core | Ethena Ecosystem | USDt | 50,000,000 | 100,000,000 |
IRM
| Hub | Asset | Parameter | Current | Recommended |
|---|---|---|---|---|
| Ethereum Core | USDC | Slope 1 | 5.00% | 5.50% |
| Ethereum Prime | USDC | Slope 1 | 5.00% | 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.