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 Ethereum:
- Increase supply cap for EURC from 46,000,000 to 92,000,000.
Aave V3 MegaETH:
- Increase supply cap for USDm from 600,000,000 to 1,000,000,000.
EURC (Aave V3 Ethereum)
EURC has reached 97.9% supply cap utilization (45,030,300 / 46,000,000) on the Aave V3 Ethereum Core instance. Borrow utilization stands at 65.1% (26,944,259 / 41,400,000). The reserve has remained close to its supply ceiling for several days, indicating sustained euro-denominated stablecoin supply demand on the Ethereum market.
EURC is a regulated euro-pegged stablecoin issued by Circle. The reserve serves both passive depositors seeking euro-denominated savings yield and borrowers using EURC for USD-stablecoin strategies.
Supply Distribution
Source: LlamaRisk, May 5, 2026
The supplier base is composed predominantly of users just depositing, with a smaller cohort of leveraged positions clustering at health factors between approximately 1.05 and 1.11. Liquidation risk on the leveraged cohort is contained by the correlated stablecoin profile of the collateral and debt sides, and by the stable nature of the underlying assets as FX volatility for EUR/USD pair remains low.
Recommendation
Given persistent supply-side demand, we recommend doubling the EURC supply cap from 46,000,000 to 92,000,000. The borrow cap remains unchanged at 41,400,000, in line with current borrow utilization that does not warrant additional headroom at this time.
USDm (Aave V3 MegaETH)
USDm has reached 99.2% supply cap utilization (595,409,478 / 600,000,000) and 61.9% borrow cap utilization (173,171,390 / 280,000,000) on the Aave V3 MegaETH instance. The supply cap refilled to its ceiling shortly after the prior cap raise, consistent with the structural demand pattern observed since the asset was listed.
Supply Distribution
Source: LlamaRisk, May 5, 2026
The supply distribution shows material concentration, with the bulk of deposits originating from a small number of large positions. However, as USDm is not enabled as collateral, this deposit concentration is relevant for potential withdrawal-induced utilization shocks, which are unlikely as USDm supply remains incentivized.
Recommendation
Given full supply cap utilization, the structurally low liquidation risk of the correlated USDe to USDm loop, we recommend increasing the USDm supply cap from 600,000,000 to 1,000,000,000. The borrow cap remains unchanged at 280,000,000, which retains 106,828,610 of borrow headroom against current outstanding borrow, sufficient buffer to monitor demand evolution before adjusting the borrow leg, meaning that the protocol does not take additional borrow exposure risk by increasing the caps and the increase is aimed towards further bootstrapping of the market.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Aave V3 Ethereum | EURC | 46,000,000 | 92,000,000 | unchanged (41,400,000) | unchanged (41,400,000) |
| Aave V3 MegaETH | USDm | 600,000,000 | 1,000,000,000 | unchanged (280,000,000) | unchanged (280,000,000) |
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.