# \[Risk Stewards\] Monad Stablecoin IRM Adjustments: Slope1 to 5.00% **URL:** \ **Category:** Risk\ **Created:** [September 11, 2026, 2:19pm UTC](https://governance.aave.com/t/risk-stewards-monad-stablecoin-irm-adjustments-slope1-to-5-00/25622 "2026-09-11T14:19:28Z")\ **Posts on this page:** 1\ **Page:** 1
**Author:** ![TokenLogic](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/tokenlogic/32/8248_2.png) [@TokenLogic](https://governance.aave.com/u/TokenLogic)\ **Post date:** [September 11, 2026, 2:19pm UTC](https://governance.aave.com/t/risk-stewards-monad-stablecoin-irm-adjustments-slope1-to-5-00/25622/1 "2026-09-11T14:19:28Z")
* * * title: [Risk Stewards] September 2026 - Monad Stablecoin IRM Adjustments: Slope1 to 5.00% author: @TokenLogic created: 2026-09-11 * * * # Summary This publication proposes increasing Slope1 to 5.00% for all stablecoin reserves on the Aave V3 Monad instance. This adjustment aims to improve market efficiency, strengthen supplier returns, and support a more sustainable balance between stablecoin supply and borrowing demand. # Rate volatility on Monad Borrow demand on Monad, driven by leveraged syrupUSDC, USDe and PT-AUSD strategies, has outgrown the supply side of the USDC and USDT0 reserves. Over the last month, both reserves have spent a third of the time above their optimal utilisation, and USDT0 supply has fallen from $167M to $57M since mid-August as large suppliers exited into the spikes. A higher Slope1 lifts the organic supply rate at the kink from 3.56% to 4.14%. Combined with the existing Merkl incentive layer, which is unchanged in budget, the displayed USDC and USDT0 lending rate on Monad moves from 5.70% to roughly 6.28%. The leveraged strategies that generate the demand keep double-digit net returns at a 1.03 health factor after the change. Slope2 remains unchanged: in an incentive-driven instance, the steep segment above the kink rebalances the market when supply is withdrawn. The August staged program already moved Monad USDC and USDT0 Slope1 from 4.00% to 4.30%. This post extends the Monad endpoint from 4.50% to 5.00% and supersedes the remaining step for this instance. ### Current state of the stablecoin reserves | Reserve | Supplied | Borrowed | Utilization | Borrow APY | Supply APY | Uoptimal / Slope1 / Slope2 | | --- | --- | --- | --- | --- | --- | --- | | USDC | $163.7M | $150.7M | 92.1% | 4.43% | 3.66% | 92% / 4.30% / 20% | | USDT0 | $57.3M | $52.8M | 92.2% | 4.73% | 3.91% | 92% / 4.30% / 20% | | GHO | $35.2M | $30.9M | 88.0% | 3.90% | 3.08% | 92% / 4.00% / 20% | | mUSD | $6.1M | $4.7M | 77.1% | 3.93% | 2.71% | 80% / 4.00% / 40% | | AUSD | $5.6M | $4.8M | 84.6% | 14.04% | 10.52% | 80% / 4.00% / 40% | ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/f/f9ba9f5d0a296f20a4d9a40f6f70f33448daf9c9.png) _USDC user deposits and active loans since launch_ ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/8/8eac2255cb2c80ff1a09fb265f3c7739b579c2b8.jpeg) _USDT0 user deposits and active loans since launch_ ### Rate spikes The hourly series over the last 30 days (8 August to 7 September) shows the two largest reserves living at the kink and repeatedly beyond it. USDC spent 208 of 721 hours above its 92% optimal utilization and USDT0 261 hours, with 13 hours above 98%. Since 24 August, the share of hours above the kink is 49% for USDC and 64% for USDT0. | Reserve | Peak borrow APR (hour) | Hours above 6% | Hours above 10% | Hours above 15% | Hours above kink | 30-day mean borrow APR | | --- | --- | --- | --- | --- | --- | --- | | USDC | 24.19% | 80 | 18 | 4 | 208 (29%) | 4.73% | | USDT0 | 27.21% | 115 | 50 | 36 | 261 (36%) | 5.37% | | GHO | 27.12% | 5 | 5 | 5 | 5 | 3.45% | | AUSD | 29.28% | 68 | 15 | 8 | n/a (Uoptimal 80%) | 4.65% | ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/f/f7a226e42d9a3575a9a33ae2bd7a413623eb2211.jpeg) _USDC hourly borrow APY, last 30 days_ ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/5/5fa4fd900defe06741b8879a215072ea6983efcc.jpeg) _USDT0 hourly borrow APY, last 30 days_ ### Withdrawals The supply side is the constraint. USDT0 supply peaked at $167.3M on 15 August and stands at $57.2M, a $110M contraction in three weeks, while debt held between $53M and $62M. ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/6/60d2e2630ba97a25801654985e0aeab573e7239b.jpeg) _USDT0 supplied, hourly, last 30 days_ ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/8/8e5c178170ab02768b83d1f45c95c51d6cf5d9ec.jpeg) _USDT0 utilisation, hourly, last 30 days_ ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/1/1e5cf08be3662ff30a32bca0e098e204cf2868cd.jpeg) _USDC supplied, hourly, last 30 days_ ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/6/6d721d5777b7bf96a8ff98893fe7c6d0413d599e.jpeg) _USDC utilisation, hourly, last 30 days_ Two conclusions follow. First, the lenders on Monad today are few and mobile: at $57M of USDT0 supply, a $5M ticket is 8.5% of the reserve which is enough for such a withdrawal to spike the rates from Uoptimal to 100% utilization. Second, the supply rate the instance offers organically (3.56% at the kink) is not what keeps this capital in place; the incentive layer is, and large, conservative lenders discount the incentive layer. # Incentive landscape on Monad The demand on the borrow side comes from three collateral legs. The table below lists every live campaign that touches the Aave Monad. ### Aave program campaigns | Reserve / side | Campaign type | Rate | Budget ceiling (per week) | Realized incentive APR | | --- | --- | --- | --- | --- | | USDC supply | Target total APR | 5.70% total | 2,250,000 WMON | 2.08% | | USDT0 supply | Target total APR | 5.70% total | 1,400,000 WMON | 1.81% | | GHO supply | Target total APR | 6.00% total | 750,000 WMON | 2.92% | | mUSD supply | Target total APR | 6.00% total | 250,000 WMON | 3.28% | | AUSD supply | Target total APR | 6.00% total | 200,000 WMON | 3.19% | | syrupUSDC supply | Max APR | 1.25% (1.00% in WMON plus 0.25% in syrupUSDC) | 1,500,000 WMON plus 10,000 syrupUSDC | 1.25% | | USDe supply | Max APR | up to 1.00% | 1,000,000 WMON | 1.00% | ### Competing stablecoin venues on other chains Every lending venue on Monad draws on the same Monad Foundation incentive budget, so the relevant comparison for a stablecoin lender is not another Monad protocol but the venues on other chains where large stablecoin balances sit today, and what those venues pay to hold them. The table below lists the largest incentivized stablecoin supply opportunities on Ethereum next to the unincentivized benchmarks, with the organic rate, the campaign-funded incentive and the displayed total (Morpho, Merkl, Aave and Sky data, 7 September). | Venue | Supplied | Organic APY | Incentive APR | Displayed total | Organic share | | --- | --- | --- | --- | --- | --- | | Morpho Ethereum, PayPal USD Main V2 vault (PYUSD) | $385M | 2.62% | 2.96% | 5.57% | 47% | | Morpho Ethereum, Sentora RLUSD Main V2 vault (RLUSD) | $349M | 2.53% | 3.57% | 6.08% | 42% | | Morpho Ethereum, Sentora PRIME Main V2 vault (PYUSD) | $200M | 3.71% | 2.46% | 6.16% | 60% | | Aave Ethereum Core USDC / USDT | $2.3B / $3.0B | 3.67% / 3.68% | none | 3.67% / 3.68% | 100% | | Aave Monad USDC / USDT0, today | $164M / $57M | 3.66% / 3.91% | 2.08% / 1.81% | 5.70% | 64% / 69% | | Aave Monad USDC / USDT0, proposed at uOptimal | | 4.14% | 2.14% | 6.28% | 66% | The PYUSD and RLUSD programs on Ethereum are the benchmark for what it costs to hold a large stablecoin book today: $11M to $12M per year of campaign spend each to display 5.6% to 6.1% on $350M to $385M, with less than half of the number organic. At the proposed curve, Aave Monad USDC and USDT0 display 6.28%, with two-thirds organic, above every incentivised venue in the table on both counts. Against the unincentivized benchmarks, the 4.14% organic rate alone sits 47 bps above Aave Ethereum Core. ### Implications Each YBS collateral generates borrow demand for USDC and USDT0 that should not respond to a 70 bps move in the borrow rate, because the spread at leverage is a multiple of that move. The demand is structural for as long as those campaigns run, and we expect these programs to run for the foreseeable future. The supply side receives $12,100 per day of WMON to hold 5.70% on USDC and USDT0, a realized incentive of 2.08% on USDC and 1.81% on USDT0. That spend bridges a 2.14 point gap between the organic rate at the kink (3.56%) and the target, and on USDC it already exceeds the weekly ceiling. The gap is the problem: a lender comparing venues sees a 5.70% number of which 38% depends on a weekly renewal. Moving 58 bps of that number from the incentive column to the organic column changes what the lender is being paid for holding the position through the next withdrawal. # Leveraged strategy economics at a 1.03 health factor The following table computes the net return of each leveraged strategy at a 1.03 health factor, using the eMode liquidation threshold that applies to the loop (92% for syrupUSDC and USDe, 95% for PT-AUSD). Collateral yield includes every live incentive listed above. The borrow rate columns compare the current and proposed rate at the kink, and the realized 30-day mean on each debt asset. | Strategy (eMode) | Collateral yield | Leverage at HF 1.03 | Net APR, borrow 4.30% (current kink) | Net APR, borrow 5.00% (proposed kink) | Net APR, borrow 4.73% (USDC 30-day mean) | Net APR, borrow 5.37% (USDT0 30-day mean) | | --- | --- | --- | --- | --- | --- | --- | | syrupUSDC (LT 92%) | 6.10% | 9.36x | 21.2% | 15.3% | 17.6% | 12.2% | | USDe (LT 92%) | 5.90% | 9.36x | 19.3% | 13.4% | 15.7% | 10.3% | | PT-AUSD (LT 95%) | 5.80% | 12.87x | 23.6% | 15.3% | 18.5% | 10.9% | Three observations. At the proposed kink rate, every strategy retains a net return of 13% or more, so the 70 bps move does not evict the demand. The break-even borrow rate of the weakest loop (PT-AUSD) is 6.29%, 129 bps above the proposed target, which is the room the DAO has before this demand is at risk. And the number that actually threatens these positions is the spike, not the target: at 96% utilization the curve prices debt at 14.3%, which turns each of these loops into a loss of 62% to 95% annualized for as long as it lasts. What shortens those episodes is deeper supply, which is what the higher Slope1 is for. # Rationale **Attract stablecoin supply and grow the instance.** The Monad instance is supply-constrained: USDC and USDT0 debt is capped by deposits, not by borrower appetite. A 4.14% organic supply rate at the kink, paired with the existing incentive layer, produces a displayed lending rate above 6% on the two largest reserves of the instance, above the incentivized PYUSD and RLUSD programs on Ethereum (5.6% to 6.2%) and roughly 250 bps above the unincentivized Aave Ethereum Core and Sky Savings rates. The August analysis measured a 0.35 to 0.76 sensitivity of deposit inflows to supply APY on satellite instances; this change relies on the same relationship. **Stabilize rates by deepening the buffer.** Every spike in the last month was a withdrawal hitting an 8% liquidity buffer. New supply attracted by a higher organic rate widens the buffer in absolute terms, so a withdrawal of a given size moves utilization less, and the reserve crosses the kink less often. Slope2 stays where LlamaRisk set it on 31 August: spikes are withdrawal-driven, and when supply isn’t coming, the steep segment above the kink rebalances the market and preserves liquidity. **Allow larger lenders to enter without concentration risk.** At $57M of USDT0 supply, a $20M lender is a third of the reserve and cannot exit without pricing the reserve at 24%. Larger reserves lower each participant’s concentration, and the IRM-funded rate is the rate institutional lenders underwrite; the incentive-funded rate is the rate they discount. The IRM change moves 58 bps of the lender’s return from the second category to the first. **Improve the borrower experience.** The leveraged strategies driving the instance run at 1.02 to 1.05 health factors and cannot absorb a 24% borrow rate for more than a few hours. A deeper buffer means fewer forced deleveraging events, which in turn means fewer sudden repayments that drop utilization and lender yield. The realized 30-day mean borrow rate on USDT0 (5.37%) is already above the proposed target; the proposal replaces a volatile 5.37% with a predictable 5.00%. **Fund lender yield through the IRM rather than the budget.** With Slope1 at 5.00% and an unchanged WMON budget, the target-total-APR campaigns on USDC and USDT0 can be re-based from 5.70% to roughly 6.28% at no additional cost; alternatively, holding the target at 5.70% reduces the program’s annual spend on these two reserves by roughly $1.3M. Either way, borrowers on $203.6M of USDC and USDT0 debt pay roughly $1.42M more per year at current balances, of which $1.28M goes to suppliers and $0.14M goes to the DAO through the 10% reserve factor. ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/e/e2ae6e5f2fc05520aba8d58ee7545e553ebec318.png) _USDC and USDT0 lender APR at optimal utilization, current versus proposed_ # Specification All changes apply to Aave V3 Monad. Uoptimal, base rate and Slope2 are unchanged on every reserve in scope. USDe is out of scope: it is mid-sequence under the yield-bearing realignment (base rate 4.00% as of 4 September). | Reserve | Uoptimal | Base rate | Slope1 current | Slope1 proposed | Slope2 (unchanged) | Maximum rate proposed | | --- | --- | --- | --- | --- | --- | --- | | USDC | 92% | 0% | 4.40% | 5.00% | 20% | 25.00% | | USDT0 | 92% | 0% | 4.40% | 5.00% | 20% | 25.00% | | GHO | 92% | 0% | 4.00% | 5.00% | 20% | 25.00% | | mUSD | 80% | 0% | 4.00% | 5.00% | 40% | 45.00% | | AUSD | 80% | 0% | 4.00% | 5.00% | 40% | 45.00% | Execution through the Monad Risk Steward. The Slope1 changes (70 bps on USDC and USDT0, 100 bps on GHO, mUSD and AUSD) each fit within the 100 bps per-update bound and can be executed in a single update per reserve. TokenLogic will re-base the USDC and USDT0 target-total-APR campaigns on the first renewal after execution so that the displayed lending rate reflects the higher organic share. # Disclaimer TokenLogic is an active service provider to the Aave DAO, the beneficiary of stream [100086](https://aave.tokenlogic.xyz/financials/expenses) and the KPI as outlined in this [publication](https://governance.aave.com/t/arfc-service-provider-compensation-reform-for-v4-alignment/23246). The scope of this engagement is available via this forum [proposal](https://governance.aave.com/t/arfc-tokenlogic-phase-ii-extension/24846). TokenLogic supports and maintains an independent [delegate voting platform](https://governance.aave.com/t/tokenlogic-delegate-platform/12516) within the Aave community. TokenLogic and associated entities have no undisclosed material conflicts of interest at the time of submission. # Copyright Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).