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 550,000,000 to 400,000,000.
- Reduce supply cap for sUSDe from 175,000,000 to 130,000,000.
- Reduce borrow cap for LINK from 1,000,000 to 500,000.
Aave V3 Avalanche:
- Reduce supply cap for sAVAX from 10,000,000 to 7,000,000.
- Reduce borrow cap for WAVAX from 11,700,000 to 6,000,000.
Aave V3 BNB Chain:
- Reduce borrow cap for WBNB from 15,600 to 4,000.
sAVAX(Aave V3 Avalanche)
Source: LlamaRisk, October 15, 2026
The reserve holds 6.73M sAVAX (approximately USD 83.0M) against a 10M supply cap (67.3% utilization). Selling sAVAX into stablecoins incurs a price impact exceeding 2% at approximately USD 210K and reaches the 10% liquidation bonus at approximately USD 783K, which is approximately 0.9% of current deposits. Stablecoin exit liquidity of this size is low relative to the collateral on the reserve, so a liquidation of any material size may not clear profitably through on-chain venues. The proposed cap of 7M sAVAX lands at approximately 96.2% post-change supply cap utilization, limiting further growth of the position until exit liquidity deepens.
Other Cap Reductions
Source: LlamaRisk, October 15, 2026
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USDe supply on Aave V3 Core reached approximately 785.2M in August and has since declined to 261.4M, a 66.7% reduction from that level and 60.3% over the past 30 days. sUSDe followed the same path, from approximately 366.5M to 104.6M, down 71.5% from its August level and 38.8% over the past 30 days. Supply caps have been lowered over the same period but continue to sit well above outstanding deposits, at 47.5% and 59.8% supply cap utilization respectively.
The proposed caps of 400M USDe and 130M sUSDe land at approximately 65.3% and 80.5% post-change supply cap utilization, aligning the caps with current demand while retaining room for renewed inflows.
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WAVAX on Aave V3 Avalanche carries 5.64M WAVAX debt (approximately USD 53.9M) against an 11.7M borrow cap (48.2% utilization), while the supply side is 96.7% utilized. The proposed borrow cap of 6M lands at approximately 94.0% post-change borrow cap utilization, aligning the cap with current demand sAVAX looping demand.
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LINK on Aave V3 Core carries 315K LINK of debt against a 1M borrow cap (31.5% utilization), with borrows down 15.7% over the past seven days and up 4.0% over 30 days. The proposed borrow cap of 500K lands at approximately 63.0% post-change borrow cap utilization, bringing the cap closer to observed demand while retaining ample headroom.
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WBNB on Aave V3 BNB Chain carries 2,590 WBNB of debt against a 15,600 borrow cap (16.6% utilization), with borrows down 10.1% over the past 30 days. The proposed borrow cap of 4,000 lands at approximately 64.8% post-change borrow cap utilization, aligning the cap with observed demand.
Specification
Supply Caps
| Instance | Asset | Current Supply Cap | Recommended Supply Cap |
|---|---|---|---|
| Aave V3 Core | USDe | 550,000,000 | 400,000,000 |
| Aave V3 Core | sUSDe | 175,000,000 | 130,000,000 |
| Aave V3 Avalanche | sAVAX | 10,000,000 | 7,000,000 |
Borrow Caps
| Instance | Asset | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|
| Aave V3 Core | LINK | 1,000,000 | 500,000 |
| Aave V3 Avalanche | WAVAX | 11,700,000 | 6,000,000 |
| Aave V3 BNB Chain | WBNB | 15,600 | 4,000 |
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.