Summary
LlamaRisk recommends the following cap changes based on user behavior, on-chain liquidity, and position health:
- Increase supply cap for tBTC on Aave V3 Ethereum Core from 2,600 to 3,000.
- Increase borrow cap for USDT0 on Aave V3 Mantle from 500,000,000 to 550,000,000.
- Increase supply cap for USDT0 on Aave V3 X Layer from 50,000,000 to 100,000,000.
tBTC (Ethereum Core)
tBTC has reached 92.4% supply cap utilization (2,402 / 2,600) on the Aave V3 Ethereum Core instance.
Supply Distribution
Source: LlamaRisk, April 15, 2026
The dominant usage pattern is leveraged borrowing, with suppliers primarily borrowing stablecoins (USDC, USDT, and DAI) against their tBTC collateral. Health factors for top suppliers cluster in the 1.3-2.2 range, which limits the liquidation risk. Moderate collateral mixing is also apparent, diversifying potential liquidation pressure.
Liquidity
Users can swap 480 tBTC ($35.4M) for USDC within a price impact of 7.5%, making the asset’s liquidity profile robust to support additional exposure.
Recommendation
Given persistent demand and limited liquidation risk from the high HF tBTC supplier profile, we recommend increasing the supply cap from 2,600 to 3,000.
USDT0 (Mantle)
USDT0 has reached 100.0% borrow cap utilization on the Aave V3 Mantle instance.
Borrow Distribution
Source: LlamaRisk, April 15, 2026
Borrowers predominantly supply yield-bearing stablecoins to borrow USDT0. Health factors are tightly clustered between 1.01 and 1.05, indicative of capital-efficient, stablecoin-looping strategies, where collateral and debt oracles are highly correlated, resulting in minimal liquidation risk from price divergence.
Recommendation
Given full cap utilization and the low-risk profile of correlated stablecoin positions, we recommend increasing the borrow cap from 500,000,000 to 550,000,000. At the current stage this increase is mainly limited by the overall available USDT0 supply, where increasing the borrow caps more aggresively may risk breaching optimal utilization point. Nonetheless, potential additional 50M in borrows would still be able to slightly increase the USDT0 supply rates and, in turn, attract more USDT0 on Aave Mantle.
USDT0 (X Layer)
The bootstrapping phase of X Layer deployment on Aave is set to begin soon, with initial supply-side activity expected to ramp up in the near term.
In preparation, a supply cap increase for USDT0 is being proposed. Importantly, this adjustment does not increase exposure risk. Borrow caps will remain unchanged at this stage, meaning this serves only as the initial step to accommodate anticipated supply inflows. Any future borrow-side adjustments would be handled separately and contingent on sufficient DEX liquidity depth and broader parameter considerations across collateral-enabled assets.
We are actively coordinating with the X Layer team to reinforce secondary market liquidity and to better prepare for the bootstrapping phase. Cap raises will be closely coordinated alongside this effort.
Supply Cap Utilization
USDT0 supply on X Layer currently stands at 0.01% with a significant buffer remaining until the current cap is filled or near full utilization.
Source: USDT0, Aave, April 14, 2026
As a supply-focused initiative, no dependencies or additional risk considerations are created with borrow caps remaining unchanged for USDT0, and no other assets on X Layer require parameter changes for this proposal.
Recommendation
We recommend increasing USDT0’s supply cap from 50M to 100M ahead of the bootstrapping phase, with further cap increases contingent on proactive engagement with the X Layer team as demand for supply cap availability arises.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Ethereum | tBTC | 2,600 | 3,000 | - | - |
| Mantle | USDT0 | - | - | 500,000,000 | 550,000,000 |
| X Layer | USDT0 | 50,000,000 | 100,000,000 | - | - |
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.