# Risk Stewards: Supply and Borrow Cap Reductions on Aave V3 / 2026.08.10 **URL:** \ **Category:** Risk\ **Created:** [August 10, 2026, 8:21pm UTC](https://governance.aave.com/t/risk-stewards-supply-and-borrow-cap-reductions-on-aave-v3-2026-08-10/25463 "2026-08-10T20:21:14Z")\ **Posts on this page:** 4\ **Page:** 1
**Author:** ![LlamaRisk](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/llamarisk/32/12865_2.png) [@LlamaRisk](https://governance.aave.com/u/LlamaRisk)\ **Post date:** [August 10, 2026, 8:21pm UTC](https://governance.aave.com/t/risk-stewards-supply-and-borrow-cap-reductions-on-aave-v3-2026-08-10/25463/1 "2026-08-10T20:21:14Z")
## 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 Plasma: - Reduce supply cap for sUSDe from 450,000,000 to 225,000,000. - Reduce supply cap for USDe from 475,000,000 to 375,000,000. - Reduce borrow cap for USDe from 425,000,000 to 335,000,000. Aave V3 Mantle: - Reduce supply cap for sUSDe from 125,000,000 to 75,000,000. Aave V3 Avalanche: - Reduce supply cap for BTC.b from 2,200 to 1,700. - Reduce supply cap for WETH.e from 20,000 to 15,000. - Reduce borrow cap for WETH.e from 18,000 to 13,500. Aave V3 Arbitrum: - Reduce supply cap for WETH from 240,000 to 150,000. - Reduce borrow cap for WETH from 215,000 to 135,000. - Reduce supply cap for weETH from 59,000 to 45,000. ## Cap Reductions The reserves below carry supply headroom above current demand. Each proposed cap retains room for growth over the current outstanding balance. ### Plasma ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/0/09aed6135e226e0ffbbb34190bc68c2ae135e35b.jpeg) _Source:_ [_LlamaRisk_](https://dashboard.llamarisk.com/protocols/aave/v3/markets/9745-0x061d8e131f26512348ee5fa42e2df1ba9d6505e9)_, August 10, 2026_ sUSDe on Aave V3 Plasma sits at 34.8% supply cap utilization (156,539,124 / 450,000,000). The proposed cap of 225,000,000 is approximately 1.44x current outstanding supply, landing at approximately 69.6% post-change cap utilization. USDe on Aave V3 Plasma sits at 57.3% supply cap utilization (272,338,483 / 475,000,000) and 47.3% borrow cap utilization (201,231,344 / 425,000,000). The proposed supply cap of 375,000,000 is approximately 1.38x current outstanding supply and the proposed borrow cap of 335,000,000 is approximately 1.66x current outstanding borrow, landing at approximately 72.6% and 60.1% post-change cap utilization respectively. ### Mantle ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/4/4b00724ab030fb64da6dd585737be95e7de615a4.png) _Source:_ [_LlamaRisk_](https://dashboard.llamarisk.com/protocols/aave/v3/markets/5000-0xba50cd2a20f6da35d788639e581bca8d0b5d4d5f/listed-assets/sUSDe?pool=Core)_, August 10, 2026_ sUSDe on Aave V3 Mantle sits at 34.8% supply cap utilization (43,559,608 / 125,000,000). The proposed cap of 75,000,000 is approximately 1.72x current outstanding supply, landing at approximately 58.1% post-change cap utilization. ### Avalanche ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/e/e8394438c4057ac54e738deb15588aa47e3ad2b4.jpeg) _Source:_ [_LlamaRisk_](https://dashboard.llamarisk.com/protocols/aave/v3/markets/43114-0xa97684ead0e402dc232d5a977953df7ecbab3cdb)_, August 10, 2026_ BTC.b on Aave V3 Avalanche sits at 58.1% supply cap utilization (1,278 / 2,200). The proposed cap of 1,700 is approximately 1.33x current outstanding supply, landing at approximately 75.2% post-change cap utilization. WETH.e on Aave V3 Avalanche sits at 56.4% supply cap utilization (11,282 / 20,000) and 47.3% borrow cap utilization (8,521 / 18,000). The proposed supply cap of 15,000 is approximately 1.33x current outstanding supply and the proposed borrow cap of 13,500 is approximately 1.58x current outstanding borrow, landing at approximately 75.2% and 63.1% post-change cap utilization respectively. ### Arbitrum ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/0/0a1f4c3af21915caf1179f417a37f494eb08b644.jpeg) _Source:_ [_LlamaRisk_](https://dashboard.llamarisk.com/protocols/aave/v3/markets/42161-0xa97684ead0e402dc232d5a977953df7ecbab3cdb)_, August 10, 2026_ WETH on Aave V3 Arbitrum sits at 43.9% supply cap utilization (105,360 / 240,000) and 26.1% borrow cap utilization (56,130 / 215,000). The proposed supply cap of 150,000 is approximately 1.42x current outstanding supply and the proposed borrow cap of 135,000 is approximately 2.41x current outstanding borrow, landing at approximately 70.2% and 41.6% post-change cap utilization respectively. weETH on Aave V3 Arbitrum sits at 63.2% supply cap utilization (37,287 / 59,000). The proposed cap of 45,000 is approximately 1.21x current outstanding supply, landing at approximately 82.9% post-change cap utilization. ## Specification | Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap | | --- | --- | --- | --- | --- | --- | | Aave V3 Plasma | sUSDe | 450,000,000 | 225,000,000 | - | - | | Aave V3 Plasma | USDe | 475,000,000 | 375,000,000 | 425,000,000 | 335,000,000 | | Aave V3 Mantle | sUSDe | 125,000,000 | 75,000,000 | - | - | | Aave V3 Avalanche | BTC.b | 2,200 | 1,700 | 79 | - | | Aave V3 Avalanche | WETH.e | 20,000 | 15,000 | 18,000 | 13,500 | | Aave V3 Arbitrum | WETH | 240,000 | 150,000 | 215,000 | 135,000 | | Aave V3 Arbitrum | weETH | 59,000 | 45,000 | - | - | ## 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. ---
**Author:** ![Gray](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/gray/32/15407_2.png) [@Gray](https://governance.aave.com/u/Gray)\ **Post date:** [August 13, 2026, 3:28am UTC](https://governance.aave.com/t/risk-stewards-supply-and-borrow-cap-reductions-on-aave-v3-2026-08-10/25463/2 "2026-08-13T03:28:29Z")
What is the rationale to decrease the caps? I understand there is a downtrend on market utilization, but why decrease the caps? ---
**Author:** ![LuFFy](https://avatars.discourse-cdn.com/v4/letter/l/c67d28/32.png) [@LuFFy](https://governance.aave.com/u/LuFFy)\ **Post date:** [September 30, 2026, 10:02am UTC](https://governance.aave.com/t/risk-stewards-supply-and-borrow-cap-reductions-on-aave-v3-2026-08-10/25463/3 "2026-09-30T10:02:19Z")
I think becasue of low supply utilization ---
**Author:** ![LuFFy](https://avatars.discourse-cdn.com/v4/letter/l/c67d28/32.png) [@LuFFy](https://governance.aave.com/u/LuFFy)\ **Post date:** [October 4, 2026, 7:37pm UTC](https://governance.aave.com/t/risk-stewards-supply-and-borrow-cap-reductions-on-aave-v3-2026-08-10/25463/4 "2026-10-04T19:37:06Z")
Supporting the recent parameter adjustments by LlamaRisk to expand the Plasma USDe supply cap to $750M while suppressing the Core borrow cap to $100M. Isolating recursive looping demand to a high-throughput network while protecting Core’s shared liquidity from contagion is the correct structural move. However, recent on-chain liquidity depth analysis indicates a severe bottleneck in secondary market exit capacity that warrants close monitoring as the Plasma caps fill. **Quantitative Findings (Multi-DEX Aggregator Depth):** - **The Liquidity Cliff:** Aggregated routing across Ethereum mainnet (Curve, Uniswap v3 0.01%, Balancer) hits a hard liquidity cliff at roughly **$4.7M** in sell volume. Pushing beyond this threshold immediately breaks the 5% price impact boundary, spiking slippage into double digits (10% - 16%). - **The Exposure:** A conservative estimate of highly leveraged, recursive USDe collateral (Health Factor \< 1.05) sits at **$80M**. - Under an immediate 5% USDe depeg scenario, the protocol faces an uncovered bad-debt gap of **~$76M**. Secondary markets simply cannot absorb the liquidatable volume without crashing the execution price well below the standard liquidation bonus. **Recommendation:** As Ethena’s basis-trade yield continues to attract leverage on Plasma, risk stewards should adopt the ratio of **“Looped TVL” to “Aggregated DEX Depth at 5% Impact”** as the primary binding constraint for future supply cap increases, rather than aggregate TVL or historical volatility alone.