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 X Layer:
- Increase borrow cap for xETH from 2,600 to 4,040.
Aave V3 Core:
- Increase supply cap for USDe from 516,000,000 to 626,000,000.
- Increase borrow cap for USDe from 290,000,000 to 366,000,000.
- Increase supply cap for wstETH from 891,000 to 1,000,000.
xETH (Aave V3 X Layer)
xETH is currently at 73.4% borrow cap utilization (1,908 / 2,600) on the Aave V3 X Layer instance.
Borrow Distribution
Source: LlamaRisk, July 7, 2026
The top twenty xETH borrowers all carry debt, with health factors between 1.04 and 2.00 and a median of 1.99. They borrow xETH against xBETH collateral within an ETH-correlated E-Mode, so both legs are ETH-denominated and the cohort’s health factor is stable to broad ETH price moves.
Recommendation
We recommend raising the borrow cap for xETH from 2,600 to 4,040 on Aave V3 X Layer. The increase takes borrow cap utilization from 73.4% to approximately 47% and provides headroom for the ETH-correlated borrow demand on the market.
USDe (Aave V3 Core)
USDe has reached 90.9% supply cap utilization (469,235,677 / 516,000,000) and 96.8% borrow cap utilization (280,650,517 / 290,000,000) on the Aave V3 Core instance.
Supply Distribution
Source: LlamaRisk, July 7, 2026
The top twenty USDe suppliers hold health factors between 1.03 and 7.17 with a median of 1.13, and seventeen of the twenty carry outstanding debt. Fifteen borrow USDT and four borrow USDC against USDe in the stablecoin E-Mode, a stablecoin-against-stablecoin position whose health factor depends on the narrow spread between fiat-pegged assets, USDe being pegged to USDT.
Borrow Distribution
Source: LlamaRisk, July 7, 2026
The top twenty USDe borrowers all carry debt, with health factors between 1.01 and 2.18 and a median of 1.11. The dominant collateral is wETH and correlated wETH assets, as well as sUSDe, keeping liquidation risk contained either through conservative health factors or the correlation between collateral and debt.
Recommendation
We recommend raising the supply cap for USDe from 516,000,000 to 626,000,000 and the borrow cap from 290,000,000 to 366,000,000 on Aave V3 Core. The changes take supply cap utilization from 90.9% to approximately 75% and borrow cap utilization from 96.8% to approximately 77%.
wstETH (Aave V3 Core)
wstETH has reached 92.1% supply cap utilization (820,166 / 891,000) on the Aave V3 Core instance.
Supply Distribution
Source: LlamaRisk, July 7, 2026
The top twenty wstETH suppliers run health factors between 1.06 and 16.32 with a median of 1.82, and nineteen of the twenty carry outstanding debt. Thirteen borrow USDT and seven borrow USDC against wstETH, with three holding WETH debt.
Recommendation
We recommend raising the supply cap for wstETH from 891,000 to 1,000,000 on Aave V3 Core. The increase takes supply cap utilization from 92.1% to approximately 82% and provides headroom for continued wstETH collateral deposits.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Aave V3 X Layer | xETH | 10,000 | — | 2,600 | 4,040 |
| Aave V3 Core | USDe | 516,000,000 | 626,000,000 | 290,000,000 | 366,000,000 |
| Aave V3 Core | wstETH | 891,000 | 1,000,000 | — | — |
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.