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.
- USDe base rate increase by 100 bps.
- Stablecoin (excluding USDe) slope1 increase by 20bps.
USDe Interest Rate Model
The recommendation raises the USDe base rate by 100 BPS on all five deployments that carry USDe, continuing the move toward the 5.25% base rate set out in the stablecoin interest rate changes proposed by TokenLogic, which prices USDe borrowing in line with Ethena’s native staking rate. On Aave V3 Core and Aave V3 Avalanche, the base increase is paired with a 100 BPS Slope1 reduction, beginning the blend toward the 0.25% Slope1 in the same proposal, since the USDe borrow APR would otherwise exceed the targeted 5.25-5.5% range.
| Instance | Utilization | uOptimal | Current Borrow APR | New Borrow APR | Delta |
|---|---|---|---|---|---|
| Aave V3 Core | 54.4% | 90.0% | 4.42% | 4.81% | +40 BPS |
| Aave V3 Plasma | 41.5% | 85.0% | 3.95% | 4.95% | +100 BPS |
| Aave V3 Monad | 27.4% | 90.0% | 3.22% | 4.22% | +100 BPS |
| Aave V3 Mantle | 19.8% | 85.0% | 2.93% | 3.93% | +100 BPS |
| Aave V3 Avalanche | 68.8% | 80.0% | 5.44% | 5.58% | +14 BPS |
Because the optimal utilization point is unchanged on all five reserves, the share of supply held as withdrawal liquidity at that point is unchanged.
USDe Debt Migration
The base rate has moved in two steps so far, from 0.00% to 1.00% on August 28 and from 1.00% to 2.00% on September 1. The figures below cover the window from the last reserve snapshot before the first step to the most recent snapshot.
| Instance | USDe debt reduced | Re-borrowed other stablecoins | Share | Not re-borrowed |
|---|---|---|---|---|
| Aave V3 Core | 107.0M | 56.8M | 53.1% | 50.2M |
| Aave V3 Plasma | 14.3M | 7.0M | 49.0% | 7.3M |
On Aave V3 Core, 86 accounts reduced their USDe debt by 107.0M in aggregate. Of that reduction, 56.8M was replaced by USDC or USDT borrowing from the same accounts. Among accounts that repaid USDe debt, those that still carry debt in other reserves account for 33.6M of the repayment. Another 0.1M came from accounts that still hold collateral but no debt, while 4.6M came from accounts that now have no position on the market at all. On Aave V3 Plasma, the equivalent 7.3M residual repayment breaks down into 6.1M from accounts that continue to borrow and 1.2M from accounts that no longer have a position.
Measured this way, accounts that left Aave V3 Core entirely represent approximately 4% of the USDe debt reduction on that market, and approximately 8% on Aave V3 Plasma. The remainder stayed on the protocol, either borrowing a different stablecoin or continuing to carry debt in other reserves.
At the reserve level, the reduction in USDe debt on Aave V3 Core was nearly offset by growth in other stablecoin reserves on the same market. However, these aggregate reserve-level changes do not establish that the same accounts drove both sides of the movement, since each reserve also reflects unrelated borrowing activity.
Stablecoin Slope1 Increases
The recommendation raises Slope1 by 20 BPS on fifteen stablecoin reserves across eleven deployments, continuing the Slope1 program in the stablecoin interest rate changes proposed by TokenLogic. The base rate, the optimal utilization point, and Slope2 are unchanged on every reserve.
| Instance | Asset | Utilization | uOptimal | Current Borrow APR | New Borrow APR | Delta |
|---|---|---|---|---|---|---|
| Aave V3 Core | USDC | 93.0% | 94.0% | 4.05% | 4.25% | +20 BPS |
| Aave V3 Core | USDT | 92.6% | 94.0% | 4.04% | 4.24% | +20 BPS |
| Aave V3 Plasma | USDT0 | 94.0% | 94.0% | 4.10% | 4.30% | +20 BPS |
| Aave V3 Arbitrum | USD₮0 | 87.7% | 90.0% | 3.99% | 4.19% | +19 BPS |
| Aave V3 Avalanche | USDC | 90.8% | 90.0% | 4.93% | 5.13% | +20 BPS |
| Aave V3 Avalanche | USDt | 91.2% | 90.0% | 5.28% | 5.48% | +20 BPS |
| Aave V3 Monad | USDC | 92.4% | 92.0% | 5.08% | 5.28% | +20 BPS |
| Aave V3 Monad | USDT0 | 91.9% | 92.0% | 4.09% | 4.29% | +20 BPS |
| Aave V3 MegaETH | USDm | 93.2% | 90.0% | 7.28% | 7.48% | +20 BPS |
| Aave V3 BNB Chain | USDC | 83.9% | 90.0% | 3.82% | 4.01% | +19 BPS |
| Aave V3 BNB Chain | USDT | 76.7% | 90.0% | 3.49% | 3.66% | +17 BPS |
| Aave V3 Gnosis | USDC.e | 65.4% | 90.0% | 2.98% | 3.13% | +15 BPS |
| Aave V3 Optimism | USDT | 80.9% | 90.0% | 3.68% | 3.86% | +18 BPS |
| Aave V3 Linea | USDC | 87.7% | 90.0% | 4.00% | 4.19% | +19 BPS |
| Aave V3 Linea | USDT | 85.9% | 90.0% | 3.92% | 4.11% | +19 BPS |
These reserves carry approximately 5.83B in aggregate debt, and most run close to their optimal utilization, as shown in the table. Because Slope2 and the optimal utilization point are unchanged, the rate response above the optimal point shifts up by the same 20 BPS, and the incentive to repay or supply during a liquidity squeeze is preserved.
Specification
USDe
| Instance | Asset | Current Base Variable Rate | Recommended Base Variable Rate | Current Slope 1 | Recommended Slope 1 |
|---|---|---|---|---|---|
| Aave V3 Core | USDe | 2.00% | 3.00% | 4.00% | 3.00% |
| Aave V3 Plasma | USDe | 2.00% | 3.00% | 4.00% | - |
| Aave V3 Monad | USDe | 2.00% | 3.00% | 4.00% | - |
| Aave V3 Mantle | USDe | 2.00% | 3.00% | 4.00% | - |
| Aave V3 Avalanche | USDe | 2.00% | 3.00% | 4.00% | 3.00% |
Slope 1
| Instance | Asset | Current Slope 1 | Recommended Slope 1 |
|---|---|---|---|
| Aave V3 Core | USDC | 4.10% | 4.30% |
| Aave V3 Core | USDT | 4.10% | 4.30% |
| Aave V3 Plasma | USDT0 | 4.10% | 4.30% |
| Aave V3 Arbitrum | USD₮0 | 4.10% | 4.30% |
| Aave V3 Avalanche | USDC | 4.10% | 4.30% |
| Aave V3 Avalanche | USDt | 4.10% | 4.30% |
| Aave V3 Monad | USDC | 4.10% | 4.30% |
| Aave V3 Monad | USDT0 | 4.10% | 4.30% |
| Aave V3 MegaETH | USDm | 4.10% | 4.30% |
| Aave V3 BNB Chain | USDC | 4.10% | 4.30% |
| Aave V3 BNB Chain | USDT | 4.10% | 4.30% |
| Aave V3 Gnosis | USDC.e | 4.10% | 4.30% |
| Aave V3 Optimism | USDT | 4.10% | 4.30% |
| Aave V3 Linea | USDC | 4.10% | 4.30% |
| Aave V3 Linea | USDT | 4.10% | 4.30% |
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.