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 Base:
- Increase supply cap for cbETH from 23,000 to 29,900.
- Reduce supply cap for ezETH from 40 to 23.
Aave V3 Arbitrum:
- Reduce supply cap for ezETH from 130 to 66.
- Reduce supply cap for AAVE from 21,500 to 10,400.
Aave V3 Core:
- Increase supply cap for syrupUSDT from 3,400,000 to 6,800,000.
- Reduce supply cap for ezETH from 6,690 to 3,330.
Aave V3 Prime:
- Reduce supply cap for ezETH from 2,000 to 150.
cbETH (Aave V3 Base)
cbETH has reached 99.97% supply cap utilization (22,994 / 23,000) on the Aave V3 Base instance.
Supply Distribution
Source: LlamaRisk, June 8, 2026
The largest cbETH suppliers maintain low health factors in the 1.02-1.10 range, primarily engaging in LST looping strategies. This is reflected in the borrow composition, with WETH accounting for $34M (~95%) of total debt against cbETH collateral, largely driven by activity within the ETH-correlated E-Mode. USDC is the second most borrowed asset, with outstanding debt of approximately $1.34M.
Recommendation
We recommend raising the supply cap for cbETH from 23,000 to 29,900 on Aave V3 Base. The reserve sits at 99.97% supply cap utilization (22,994 / 23,000), and the increase lowers post-change utilization to approximately 76.9%.
syrupUSDT (Aave V3 Core)
syrupUSDT has reached 99.99% supply cap utilization (3,399,766 / 3,400,000) on the Aave V3 Core instance.
Supply Distribution
Source: LlamaRisk, June 8, 2026
The largest syrupUSDT suppliers maintain relatively low health factors, with borrowing concentrated in USDT and GHO against syrupUSDT collateral. This activity is primarily facilitated through the dedicated stablecoin E-Mode category, which offers a 90% LTV and 92% liquidation threshold.
Recommendation
We recommend raising the supply cap for syrupUSDT from 3,400,000 to 6,800,000 on Aave V3 Core. The reserve sits at 99.99% supply cap utilization (3,399,766 / 3,400,000).
Cap Reductions
ezETH is configured as collateral on E-Modes, and is non-borrowable on the Aave V3 Core, Prime, Base, and Arbitrum instances. On each, the supply cap is reduced to approximately 15% below current outstanding supply, due to the low onchain liquidity, which halts new deposits while leaving existing positions unaffected: Core from 6,690 to 3,330 (58.5% current utilization), Prime from 2,000 to 150 (8.9%), Base from 40 to 23 (66.9%), and Arbitrum from 130 to 66 (60.2%).
AAVE on Aave V3 Arbitrum currently utilizes 60.5% of its supply cap (13,003 out of 21,500). Due to constrained market liquidity, the supply cap has been reduced from 21,500 to 10,400, approximately 20% below the current outstanding supply. This change prevents new deposits while preserving all existing positions.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap |
|---|---|---|---|
| Aave V3 Base | cbETH | 23,000 | 29,900 |
| Aave V3 Base | ezETH | 40 | 23 |
| Aave V3 Arbitrum | ezETH | 130 | 66 |
| Aave V3 Arbitrum | AAVE | 21,500 | 10,400 |
| Aave V3 Core | syrupUSDT | 3,400,000 | 6,800,000 |
| Aave V3 Core | ezETH | 6,690 | 3,330 |
| Aave V3 Prime | ezETH | 2,000 | 150 |
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.