LlamaRisk proposes cap and IRM changes across Aave V4 and V3

LlamaRisk published simultaneous parameter recommendations for Aave V4 and V3 on Oct. 23, pairing higher limits in some markets with reductions in others. The stated basis: user behavior, on-chain liquidity and position health. The Aave V4 governance proposal is the primary document for the newer deployment.

A separate Aave governance proposal covers V3, published the same day.

On Aave V4 Ethereum, LlamaRisk is proposing more room for USDT$0.9991▲0.01% on the Prime Hub Bluechip Spoke: the add cap would rise from 13.125 million to 20 million, while the draw cap would move from 15.625 million to 18.4 million.

That’s a 6.875 million increase in the add cap — roughly 52.4% relative to the current limit. The draw cap increase would be smaller: 2.775 million, or about 17.8%. Suppliers would gain more headroom to add USDT; borrowers would see a proportionally lighter increase in draw capacity.

LlamaRisk also recommends doubling the add cap for WWAVAX from 1 million to 2 million on Aave V4 Avalanche’s Core Hub Main Spoke.

Interest-rate parameters are proposed to move alongside the cap changes. On Aave V4 Ethereum’s Plus Hub, slope1 for USDC and USDT would rise from 4.60% to 4.70%. The V4 document puts the USDC supply APY at 3.44% currently and 3.51% under the proposal — a 0.07 percentage-point increase. For USDT, the figures are 3.64% and 3.72%, an increase of 0.08 percentage points.

For liquidity providers, those proposed APY changes would raise the stated supply return if the displayed figures become effective. For borrowers, the higher slope1 means an increase in the relevant interest-rate parameter.

Other V4 proposals run the other way. The draw cap for USDG on the Global Dollar Hub PAXG Gold Spoke would fall from 9.5 million to 5 million. On the Global Dollar Hub USDG Maple Spoke, by contrast, the USDG add cap would rise from 55 million to 65 million and the draw cap from 50 million to 60 million, with the syrupUSDG add cap on that same Maple Spoke climbing from 70 million to 75 million.

The most restrictive V4 proposals target USDG on Pendle spokes. The draw cap on the Global Dollar Hub USDG Pendle Spoke would fall from 4 million to zero; the Core Hub USDG Pendle Spoke draw cap would go from 15 million to zero. The governance record ties the first change to the Sept. 24 maturity of PT-USDG-24SEP2026, which produced a recommendation to prevent new borrowing on that spoke.

That maturity-linked rationale puts the V4 filing in a documented sequence rather than a blanket expansion or contraction. The proposals would open capacity for USDT, WAVAX, USDG and syrupUSDG in named locations while closing new USDG borrowing on two Pendle spokes.

On Aave V3 Core, the proposed supply cap for cbBTC would decline from 22,800 to 20,000. The sUSDe cap would fall from 130 million to 105 million and the USDe cap from 300 million to 275 million.

Two dated Principal Token reserves would be cut to 1 because of maturity. PT-srUSDe-22OCT2026 on V3 Core would move from a 20 million supply cap to 1 after reaching maturity on Oct. 22. PT-sUSDE-22OCT2026 on V3 Plasma would fall from 50 million to 1 for the same stated reason.

PT-srUSDe’s proposed cap of 1 removes 19,999,999 units of headroom from a 20 million limit; PT-sUSDE’s proposed cap of 1 removes 49,999,999 from 50 million.

Additional V3 cuts affect WAVAX on Avalanche and several assets on X Layer. WAVAX’s supply cap on V3 Avalanche would decline from 18.16 million to 16 million. On X Layer: PT-USDG-29OCT2026 would fall from 140 million to 50 million; xETH’s supply cap from 20,000 to 10,000 and its borrow cap from 8,080 to 5,000; xBTC from 500 to 200; xBETH from 11,400 to 5,000; and xOKSOL from 135,000 to 75,000.

One V3 rate increase appears in the filing. Slope1 for USDC on Aave V3 Arbitrum would rise from 4.00% to 4.10%, with the proposal’s stated USDC borrow APR moving from 3.47% to 3.56% — nine basis points, calculated as 3.56% minus 3.47%.

LlamaRisk is a DeFi risk service provider funded in part by the Aave DAO.