Summary
LlamaRisk recommends the following supply and borrow cap changes on the Aave V3 MegaETH and Monad instances. The changes fall into two groups: cap increases on two reserves that are pinned at 100% of their supply cap, and a recalibration of the Monad reserves whose launch caps sit above realized usage and available liquidity. As detailed below, the two saturated reserves are consumed by a small number of leveraged looping positions operating close to the liquidation threshold, so the increases are supported by demonstrated demand but carry concentrated liquidation risk that we flag for monitoring.
Aave V3 MegaETH:
- Increase stcUSD supply cap from 10,000,000 to 20,000,000.
Aave V3 Monad:
- Increase syrupUSDC supply cap from 40,000,000 to 80,000,000.
- Reduce sUSDe supply cap from 60,000,000 to 20,000,000.
- Reduce USDe supply cap from 60,000,000 to 20,000,000 and borrow cap from 50,000,000 to 18,000,000.
- Reduce cbBTC supply cap from 1,000 to 400.
- Reduce WETH supply cap from 40,000 to 14,100 and borrow cap from 36,000 to 12,400.
- Reduce wstETH supply cap from 35,000 to 4,600.
- Reduce weETH supply cap from 30,000 to 10,300.
Cap Increases
stcUSD (MegaETH)
stcUSD supply stands at the 10,000,000 supply cap, with no remaining headroom for new deposits. The reserve has absorbed its full cap and continued demand cannot be accommodated at the current setting. We propose doubling the supply cap to 20,000,000.
The composition of that supply is concentrated. Two wallets account for essentially the entire cap (approximately 5.14M and 4.85M stcUSD, roughly $5.5M and $5.2M respectively), and both run the same leveraged strategy: supply stcUSD as collateral and borrow USDm against it. Each sits at a health factor of about 1.03. The remaining suppliers are dust. In other words, the 100% cap utilization reflects two thin-margin looping positions rather than broad organic demand, so doubling the cap primarily creates room for those actors (or the same strategy replicated) to extend leverage. The increase is reasonable given the liqudity situation and initial adoption, but the concentration and the health-factor cluster near 1.0 warrant continued monitoring of liquidity for USDm and stcUSD to ensure liquidations of these positions can be absorbed.
Source: LlamaRisk, July 5, 2026
syrupUSDC (Monad)
syrupUSDC supply on Monad is at the 40,000,000 supply cap. As with stcUSD, the reserve is saturated and cannot take additional deposits. We propose doubling the supply cap to 80,000,000 to accommodate continued demand.
The supply is highly concentrated and, as on MegaETH, is driven by leveraged looping. A single wallet supplies approximately 26M syrupUSDC (about $30.9M, or roughly 65% of the entire cap), borrowing about $27.8M of USDT0 and USDC against it at a health factor of about 1.02. The next fifteen suppliers run the identical loop, each at a health factor between roughly 1.02 and 1.09. As with stcUSD, the cap is consumed by a small number of positions operating just above the liquidation threshold. Before proceeding with further increases, we will continue to monitor the borrow-side stablecoin liquidity on Monad that these positions would need to unwind against.
Source: LlamaRisk, July 5, 2026
Monad Recalibration
The remaining Monad reserves carry launch-era caps that were sized generously relative to the DEX liquidity and usage the market has developed since deployment. Realized utilization on each of these reserves is in the low single digits as a share of the current supply cap. Right-sizing the caps toward observed demand reduces the protocol’s tail exposure to reserves whose on-chain and DEX liquidity does not yet support the deployed caps, while leaving some headroom above current balances.
sUSDe (Monad)
Current supply is approximately 2.65M sUSDe (about $3.28M) against the 60,000,000 supply cap, or roughly 4.4% utilization. We propose reducing the supply cap to 20,000,000, which remains an order of magnitude above the current balance and aligns the ceiling with realized demand. This would be re-evaluated after proper DEX liquidity is formed.
USDe (Monad)
USDe supply is negligible (approximately 100 tokens) against the 60,000,000 supply cap, and there is no outstanding borrow against the 50,000,000 borrow cap. We propose reducing the supply cap to 20,000,000 and the borrow cap to 18,000,000. This would be re-evaluated after proper DEX liquidity is formed.
cbBTC (Monad)
Current supply is approximately 3.5 cbBTC (about $0.22M) against the 1,000 supply cap, or roughly 0.3% utilization. Based on current liquidity conditions, we target a $25M notional ceiling which equates to 400 cbBTC. This preserves substantial headroom above current usage while aligning the cap with the reserve’s liquidity profile.
WETH (Monad)
Current supply is approximately 3,217 WETH (about $5.70M, 8.0% of cap) with approximately 1,982 WETH borrowed (5.5% of the borrow cap). Based on current liquidity conditions, we target a $25M supply notional, which equates to 14,100 WETH. Borrow cap is accordingly set to 12,400 WETH. Both new caps remain well above current balances.
wstETH (Monad)
Current supply is approximately 1,100 wstETH (about $2.41M) against the 35,000 supply cap, or roughly 3.1% utilization. Targeting a $10M notional ceiling equates to 4,600 wstETH. This would be re-evaluated after proper DEX liquidity has formed.
weETH (Monad)
Current supply is approximately 673 weETH (about $1.31M) against the 30,000 supply cap, or roughly 2.2% utilization. Targeting a $20M notional ceiling equates to 10,300 weETH. While DEX liquidity continues to increase for this asset, further caps raises would be contingent upon the capacity of WETH reserve.
Specification
| Instance | Asset | Parameter | Current | Proposed | Approx. USD |
|---|---|---|---|---|---|
| Aave V3 MegaETH | stcUSD | supplyCap | 10,000,000 | 20,000,000 | ~$21.4M |
| Aave V3 Monad | syrupUSDC | supplyCap | 40,000,000 | 80,000,000 | ~$93.7M |
| Aave V3 Monad | sUSDe | supplyCap | 60,000,000 | 20,000,000 | ~$24.7M |
| Aave V3 Monad | USDe | supplyCap | 60,000,000 | 20,000,000 | ~$20.0M |
| Aave V3 Monad | USDe | borrowCap | 50,000,000 | 18,000,000 | ~$18.0M |
| Aave V3 Monad | cbBTC | supplyCap | 1,000 | 400 | ~$25.1M |
| Aave V3 Monad | WETH | supplyCap | 40,000 | 14,100 | ~$25.0M |
| Aave V3 Monad | WETH | borrowCap | 36,000 | 12,400 | ~$22.0M |
| Aave V3 Monad | wstETH | supplyCap | 35,000 | 4,600 | ~$10.1M |
| Aave V3 Monad | weETH | supplyCap | 30,000 | 10,300 | ~$20.0M |
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.