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 Monad:
- Increase supply cap for USDe from 100,000,000 to 150,000,000.
- Increase supply cap for AUSD from 20,000,000 to 40,000,000.
- Increase borrow cap for AUSD from 18,000,000 to 32,000,000.
- Increase borrow cap for mUSD from 25,000,000 to 40,000,000.
- Reduce supply cap for PT-AUSD-8OCT2026 from 80,000,000 to 1.
Aave V3 Core:
- Reduce supply cap for USDe from 700,000,000 to 550,000,000.
USDe (Aave V3 Monad)
USDe is currently at 89.8% supply cap utilization on the Aave V3 Monad instance.
Supply Distribution
Source: LlamaRisk, October 8, 2026
Supply is concentrated in a small number of positions, which run health factors between 1.01 and 1.51 with a median of 1.15, and 11 of 16 carry outstanding debt. Debt is denominated predominantly in USDC, with USDT0 second, held against USDe collateral within the USDe and sUSDe stablecoin E-Mode category, and since USDe is priced through the same USDT/USD feed as USDT0, the health factor of these positions tracks the USDT price relative to USDC.
Recommendation
We recommend raising the supply cap from 100M to 150M on Aave V3 Monad, which places the reserve at approximately 59.9% post-change cap utilization. The borrow cap is unchanged.
AUSD (Aave V3 Monad)
AUSD has reached 100.0% supply cap utilization and 45.9% borrow cap utilization on the Aave V3 Monad instance.
Supply Distribution
Source: LlamaRisk, October 8, 2026
All of the top suppliers hold AUSD without outstanding debt, as AUSD is not enabled as collateral on this instance. Supply is concentrated, with the largest position accounting for 51.9% of supply, the top three for 74.8%, and the top five for 82.6%.
Borrow Distribution
Source: LlamaRisk, October 8, 2026
The top AUSD borrowers run health factors between 1.02 and 1.62 with a median of 1.05, and borrowing is concentrated in the largest position. syrupUSDC is the most common collateral, followed by USDe, so health factors depend on the syrupUSDC exchange rate and the price of the stablecoin collateral relative to AUSD.
Recommendation
We recommend raising the supply cap from 20M to 40M and the borrow cap from 18M to 32M on Aave V3 Monad, which places the reserve at approximately 50.0% post-change supply cap utilization and 25.8% post-change borrow cap utilization.
mUSD (Aave V3 Monad)
mUSD is currently at 84.1% borrow cap utilization on the Aave V3 Monad instance.
Borrow Distribution
Source: LlamaRisk, October 8, 2026
The top mUSD borrowers run health factors between 1.01 and 1.84 with a median of 1.03, and syrupUSDC is the collateral in most positions. mUSD is priced at a fixed 1.00 USD and syrupUSDC through its exchange rate to USDC, so the health factor of these positions tracks the USDC price and the syrupUSDC exchange rate.
Recommendation
We recommend raising the borrow cap from 25M to 40M on Aave V3 Monad, which places the reserve at approximately 52.6% post-change borrow cap utilization. The supply cap is unchanged.
Cap Reductions
On Aave V3 Monad, PT-AUSD-8OCT2026 reached its scheduled maturity on October 8, 2026. The reserve holds approximately 44.74M PT. After maturity, the PT becomes redeemable at par against the underlying. The proposed supply cap of 1 closes new deposits while existing holders retain the ability to withdraw or redeem.
USDe on Aave V3 Core sits at 57.8% supply cap utilization (404.53M / 700M), after supply declined by approximately 137M since October 6. The contraction coincided with an increase in the USDT borrow rate on the instance from approximately 4.4% to 6.8% on October 6, and the outflows came predominantly from positions holding USDe collateral against USDT debt, which repaid USDT and withdrew USDe. The proposed cap of 550M is approximately 1.36x current outstanding supply, landing at approximately 73.6% post-change cap utilization, and retains headroom for supply to return to the instance.
Specification
Supply Caps
| Instance | Asset | Current Supply Cap | Recommended Supply Cap |
|---|---|---|---|
| Aave V3 Monad | USDe | 100,000,000 | 150,000,000 |
| Aave V3 Monad | AUSD | 20,000,000 | 40,000,000 |
| Aave V3 Monad | PT-AUSD-8OCT2026 | 80,000,000 | 1 |
| Aave V3 Core | USDe | 700,000,000 | 550,000,000 |
Borrow Caps
| Instance | Asset | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|
| Aave V3 Monad | AUSD | 18,000,000 | 32,000,000 |
| Aave V3 Monad | mUSD | 25,000,000 | 40,000,000 |
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.