Summary
LlamaRisk recommends the following parameter changes based on user behavior, onchain liquidity, and position health observed in the latest review of Aave V3 reserves.
Aave V3 Ethereum:
- Increase supply cap for FBTC from 350 to 520.
- Reduce supply cap for USDe from 2,000,000,000 to 400,000,000.
- Reduce supply cap for syrupUSDT from 100,000,000 to 18,000,000.
- Reduce supply cap for ezETH on MegaETH from 10,000 to 1.
- Update PT-USDe-7MAY2026 Stablecoins E-Mode (34): reduce LB from 3.2% to 2.4%.
- Update PT-USDe-7MAY2026 USDe E-Mode (35): increase LTV from 93.9% to 94.0%, increase LT from 95.9% to 96.0%, reduce LB from 2.2% to 1.6%.
- Update PT-USDG-28MAY2026 Stablecoins E-Mode (46): increase LTV from 93.5% to 93.6%, increase LT from 95.5% to 95.6%.
- Update PT-srUSDe-25JUN2026 USDe E-Mode (45): increase LTV from 91.2% to 91.5%, increase LT from 93.2% to 93.5%, reduce LB from 3.3% to 2.8%.
Aave V3 X Layer:
- Increase supply cap for WOKB from 125,000 to 250,000.
Aave V3 Plasma:
- Reduce supply cap for syrupUSDT from 450,000,000 to 180,000,000.
- Reduce supply cap for WETH from 8,500 to 4,400.
- Reduce supply cap for XAUt0 from 3,500 to 1,750.
Aave V3 Mantle:
- Reduce supply cap for sUSDe from 300,000,000 to 122,000,000.
- Reduce supply cap for USDe from 100,000,000 to 30,000,000.
Aave V3 Linea:
- Reduce supply cap for ezETH from 20,000 to 7,900.
Aave V3 Gnosis:
- Reduce supply cap for GNO from 110,000 to 1.
Aave V3 MegaETH:
- Reduce supply cap for ezETH from 10,000 to 1.
FBTC (Aave V3 Ethereum)
FBTC has reached 98.5% supply cap utilization (344.7 / 350) on the Aave V3 Ethereum instance.
Supply Distribution
Source: LlamaRisk, April 29, 2026
The dominant usage pattern is leveraged borrowing of BTC-correlated and stablecoin debt against FBTC collateral. Health factors among active borrowers cluster between 1.02 and 1.83, with a smaller cohort at 2.85 and above where leverage is more conservative. Several positions hold FBTC as collateral-only, reflecting passive deposit usage. The tight HF range among levered positions is consistent with capital-efficient looping; collateral and debt are highly correlated under the FBTC/WBTC E-Mode (LTV 84%, LT 86%) for the largest position, which limits liquidation risk from price divergence.
Recommendation
Given persistent demand and the correlated collateral profile that anchors active borrowing, we recommend increasing the supply cap from 350 to 520. The borrow cap remains unchanged.
WOKB (Aave V3 X Layer)
WOKB has reached 100% supply cap utilization (125,000 / 125,000) on the Aave V3 X Layer instance. The reserve permits collateral usage through the WOKB-Stablecoin E-Mode (LTV 50%, LT 55%, LB 10%), with borrowing enabled.
Supply Distribution
Source: LlamaRisk, April 29, 2026
Supply is concentrated among a small number of positions, all of which hold WOKB on a passive deposit basis without active borrowing. Health factors across the depicted positions are effectively infinite, indicating that the available E-Mode borrow capacity is currently unused. In the absence of debt, supply-side liquidation pathways do not exist for these positions, and the cap raise accommodates additional passive supply without introducing new liquidation risk. DEX coverage at 1x liquidation bonus is 2.42% of deposits.
Recommendation
Given full cap utilization, the absence of active borrowing against WOKB collateral at the time of review, and peer-typical DEX coverage on X Layer venues, we recommend increasing the supply cap from 125,000 to 250,000. The borrow cap remains unchanged. Should leveraged borrowing materialize against WOKB collateral in subsequent observation windows, additional DEX depth would support a more aggressive raise. We are coordinating with X Layer team to ensure appropriate liquidity levels before further increases can happen.
Cap Reductions on Cap-Underused Reserves
Some carry supply caps materially above current deposits and observed DEX liquidity. Others remain to have caps that are overly high in comparison with currently supplied assets. The proposed reductions align each cap with the asset’s current scale, retaining a moderate buffer above present deposits, except for some assets where liquidity conditions have deteriorated requiring a more aggressive response.
| Instance | Asset | Cap Util. | Current Cap | Proposed Cap | Rationale |
|---|---|---|---|---|---|
| Aave V3 Ethereum | USDe | 11% | 2,000,000,000 | 400,000,000 | 1.9x current deposits; 99.5% correlated loops |
| Aave V3 Mantle | sUSDe | 21% | 300,000,000 | 122,000,000 | ~2x headroom; 100% correlated loops |
| Aave V3 Mantle | USDe | 15% | 100,000,000 | 30,000,000 | ~2x current deposits; stable-stable leverage |
| Aave V3 Plasma | syrupUSDT | 27% | 450,000,000 | 180,000,000 | Stable-stable correlated E-Modes only |
| Aave V3 Ethereum | syrupUSDT | 1% | 100,000,000 | 18,000,000 | ~14x current deposits; constrains unused tier |
| Aave V3 Linea | ezETH | 26% | 20,000 | 7,900 | Buffer sized to current deposits |
| Aave V3 Plasma | WETH | 24% | 8,500 | 4,400 | DEX coverage lowered |
| Aave V3 Plasma | XAUt0 | 29% | 3,500 | 1,750 | Deteriorated DEX liquidity depth |
| Aave V3 Gnosis | GNO | 74% | 110,000 | 1 | Deteriorated DEX liquidity depth |
| Aave V3 MegaETH | ezETH | ~0% | 10,000 | 1 | No DEX liquidity |
Defensive Cap Floor on a Listed-Not-Collateral Reserve
ezETH on Aave V3 MegaETH is listed but configured as non-collateral. Current deposits are 0.0025 ezETH against a supply cap of 10,000 ezETH. Reducing the supply cap to 1 ezETH freezes exposure pending review of the DEX liquidity commitments.
PT E-Mode Parameter Updates (Ethereum Core)
Parameter updates for active PT E-Mode categories on Ethereum Core are computed using the PT parameter methodology, which carries over the same properties as were previously applied by the risk oracle, done manually to ensure full continuity. The methodology prices the maximum single-block discount rate move under observed market conditions and maps the resulting price-impact bound to LTV, LT, and LB values. Inputs include the current discount rate, maximum discount rate, Pendle AMM scalar root, and market-implied yield.
PT-USDe-7MAY2026 (Ethereum Core)
PT-USDe-7MAY2026 matures on May 7, 2026. The token is currently trading at a 3.95% annualized discount rate against a maximum of 25.69%. With approximately 8 days to maturity, the remaining discount window is narrow and the price has converged close to par.
Source: LlamaRisk, April 29, 2026
Two E-Mode categories reference this PT:
Stablecoins E-Mode (34) allows borrowing of USDC, USDT, and other stablecoins against PT-USDe collateral. The current parameters are LTV 91.0%, LT 93.0%, LB 3.2%. The compressed time to maturity supports a tighter liquidation bonus. The methodology yields LB 2.4% with LTV and LT unchanged.
USDe E-Mode (35) allows borrowing of USDe against PT-USDe collateral. This is the tighter category given the high correlation between collateral and debt. The current parameters are LTV 93.9%, LT 95.9%, LB 2.2%. The methodology yields LTV 94.0%, LT 96.0%, LB 1.6%. The LTV and LT increases are marginal (+0.1% each); the primary change is the LB reduction from 2.2% to 1.6%, reflecting the near-zero price risk at this proximity to maturity.
PT-USDG-28MAY2026 (Ethereum Core)
PT-USDG-28MAY2026 matures on May 28, 2026, with a current discount rate of 5.12% against a maximum of 18.82%. This asset was recently listed on Ethereum Core with a single Stablecoins E-Mode (46) at LTV 93.5%, LT 95.5%, LB 2.0%.
Source: LlamaRisk, April 29, 2026
Given the proximity to maturity and the narrowing discount, a conservative LTV and LT increase of 0.1% each is warranted on the PT-USDG Stablecoins E-Mode. LTV moves from 93.5% to 93.6%, LT from 95.5% to 95.6%, and LB remains at 2.0%.
PT-srUSDe-25JUN2026 (Ethereum Core)
PT-srUSDe-25JUN2026 matures on June 25, 2026, with a current discount rate of 4.61% against a maximum of 16.66%. With 57 days to maturity, there is more residual time value than the May-dated PTs above.
Source: LlamaRisk, April 29, 2026
Two E-Mode categories reference this PT:
Stablecoins E-Mode (44) has current parameters LTV 90.0%, LT 92.0%, LB 4.3%. No change is required at this time.
USDe E-Mode (45) has current parameters LTV 91.2%, LT 93.2%, LB 3.3%. The methodology yields LTV 91.5%, LT 93.5%, LB 2.8%. The LTV and LT increases (+0.3% each) reflect the narrowing discount. The LB reduction from 3.3% to 2.8% tightens the liquidation bonus in line with the decreased price volatility as the discount rate decays toward maturity.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap |
|---|---|---|---|
| Aave V3 Ethereum | FBTC | 350 | 520 |
| Aave V3 X Layer | WOKB | 125,000 | 250,000 |
| Aave V3 Ethereum | USDe | 2,000,000,000 | 400,000,000 |
| Aave V3 Plasma | syrupUSDT | 450,000,000 | 180,000,000 |
| Aave V3 Mantle | sUSDe | 300,000,000 | 122,000,000 |
| Aave V3 Mantle | USDe | 100,000,000 | 30,000,000 |
| Aave V3 Linea | ezETH | 20,000 | 7,900 |
| Aave V3 Ethereum | syrupUSDT | 100,000,000 | 18,000,000 |
| Aave V3 Plasma | WETH | 8,500 | 4,400 |
| Aave V3 Plasma | XAUt0 | 3,500 | 1,750 |
| Aave V3 Gnosis | GNO | 110,000 | 1 |
| Aave V3 MegaETH | ezETH | 10,000 | 1 |
PT E-Mode Parameter Changes (Ethereum Core)
| Asset | E-Mode | Current LTV | New LTV | Current LT | New LT | Current LB | New LB |
|---|---|---|---|---|---|---|---|
| PT-USDe-7MAY2026 | Stablecoins (34) | 91.0% | 91.0% | 93.0% | 93.0% | 3.2% | 2.4% |
| PT-USDe-7MAY2026 | USDe (35) | 93.9% | 94.0% | 95.9% | 96.0% | 2.2% | 1.6% |
| PT-USDG-28MAY2026 | Stablecoins (46) | 93.5% | 93.6% | 95.5% | 95.6% | 2.0% | 2.0% |
| PT-srUSDe-25JUN2026 | USDe (45) | 91.2% | 91.5% | 93.2% | 93.5% | 3.3% | 2.8% |
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.