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:
- Reduce supply cap for USDe from 400,000,000 to 300,000,000.
- Reduce supply cap for LINK from 11,400,000 to 9,000,000.
- Reduce supply cap for rETH from 49,000 to 40,000.
- Decrease optimalUsageRatio for USDT from 94.00% to 92.00%.
Aave V3 Plasma:
- Reduce borrow cap for USDe from 100,000,000 to 50,000,000.
- Reduce supply cap for PT-sUSDE-22OCT2026 from 100,000,000 to 50,000,000.
Aave V3 Polygon:
- Reduce supply cap for WPOL from 101,000,000 to 65,000,000.
- Reduce borrow cap for WPOL from 30,430,000 to 25,000,000.
USDT Optimal Utilization (Aave V3 Core)
USDT on Aave V3 Core holds approximately 2.89B USDT in supply against 2.48B in debt, with 85.6% utilization. The recommendation moves the optimal utilization point from 94.00% to 92.00%. The base rate, Slope1, and Slope2 are unchanged, so the borrow rate at the optimal point stays at 4.50% APR, and the rate at full utilization stays at 14.50% APR.
At the current 85.6% utilization, the variable borrow rate would move from 4.10% to 4.19% APR, and the supply rate from 3.16% to 3.22% APR.
Withdrawal Liquidity at the Optimal Point
The optimal point sets how much of the supply remains available for withdrawal when the reserve operates at its intended level. Moving it down by two percentage points converts borrow capacity into exit liquidity.
| Instance | Asset | Supplied | Borrowed | Utilization | Idle Liquidity |
|---|---|---|---|---|---|
| Aave V3 Core | USDT | 2,892.2M | 2,475.1M | 85.6% | 417.0M |
| Instance | Asset | Buffer at Optimal (current) | Buffer at Optimal (new) | Change | Borrow Headroom to Optimal (current) | Borrow Headroom to Optimal (new) |
|---|---|---|---|---|---|---|
| Aave V3 Core | USDT | 173.5M | 231.4M | +57.8M | 243.5M | 185.7M |
The withdrawal buffer at the optimal point grows by two percent of the supplied balance, and the borrow capacity available before Slope2 engages falls by the same amount. At prevailing utilization, approximately 185.7M USDT of borrowing remains available before the new optimal point, so the change adds withdrawal buffer while leaving room for borrow demand at current rates.
Cap Reductions
- USDe on Aave V3 Core sits at 64.9% supply cap utilization, with supply down 57.3% over the past 30 days. The proposed cap of 300M is approximately 1.16x current outstanding supply, landing at approximately 86.5% post-change cap utilization.
- LINK on Aave V3 Core sits at 66.3% supply cap utilization, with supply down 9.5% over the past 30 days. The proposed cap of 9M is approximately 1.19x current outstanding supply, landing at approximately 84.0% post-change cap utilization.
- rETH on Aave V3 Core sits at 69.1% supply cap utilization, with supply down 4.6% over the past 30 days. The proposed cap of 40,000 is approximately 1.18x current outstanding supply, landing at approximately 84.6% post-change cap utilization.
- USDe on Aave V3 Plasma carries 31,058,150 USDe of debt against a 100M borrow cap (31.1% utilization), with borrows down 32.8% over the past 30 days. The proposed borrow cap of 50M is approximately 1.61x current outstanding debt, landing at approximately 62.1% post-change borrow cap utilization.
- PT-sUSDE-22OCT2026 on Aave V3 Plasma sits at 25.7% supply cap utilization, with supply down 55.9% over the past 30 days ahead of its October 22, 2026 maturity. The proposed cap of 50M is approximately 1.95x current outstanding supply, landing at approximately 51.4% post-change cap utilization.
- WPOL on Aave V3 Polygon sits at 49.5% supply cap utilization, with supply down 34.2% over the past seven days. The proposed supply cap of 65M is approximately 1.30x current outstanding supply, landing at approximately 76.9% post-change cap utilization. The reserve carries 18.26M WPOL of debt against a 30.43M borrow cap (60.0% utilization), and the proposed borrow cap of 25M lands at approximately 73.0% post-change borrow cap utilization.
Specification
Supply Caps
| Instance | Asset | Current Supply Cap | Recommended Supply Cap |
|---|---|---|---|
| Aave V3 Core | USDe | 400,000,000 | 300,000,000 |
| Aave V3 Core | LINK | 11,400,000 | 9,000,000 |
| Aave V3 Core | rETH | 49,000 | 40,000 |
| Aave V3 Plasma | PT-sUSDE-22OCT2026 | 100,000,000 | 50,000,000 |
| Aave V3 Polygon | WPOL | 101,000,000 | 65,000,000 |
Borrow Caps
| Instance | Asset | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|
| Aave V3 Plasma | USDe | 100,000,000 | 50,000,000 |
| Aave V3 Polygon | WPOL | 30,430,000 | 25,000,000 |
IRM
| Instance | Asset | Current Uoptimal | Recommended Uoptimal |
|---|---|---|---|
| Aave V3 Core | USDT | 94.00% | 92.00% |
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.