LlamaRisk proposes Aave cap shifts across V3 and V4

tETH on Aave V3 Prime is already over its supply cap. LlamaRisk wants to raise it. On V3 Core, the same asset would be cut to a one-tETH ceiling. Both recommendations appear in a filing published on Aave Governance on October 16, 2026, alongside borrow-cap reductions for WBTC, cbBTC, and WETH across separate V3 deployments.

A second LlamaRisk proposal — covering Aave V4 — would lift add caps for USDC and USDT on Ethereum’s Core Hub Main Spoke, expand stablecoin capacity on the Forex Spoke, and double the USDt add cap on Avalanche’s Core Hub Main Spoke. Both filings describe the changes as responses to recent user behavior and on-chain data.

Neither set of changes has an implementation date. These are proposed parameter adjustments, not live settings. The changes remain pending, and users remain subject to the current parameters until Aave governance implements them.

V3: tighter borrowing, one large tETH exception

On Aave V3 Prime, LlamaRisk proposes lifting tETH’s supply cap from 15,000 to 20,000 tETH. The reserve currently holds 15,189 tETH against that 15,000 cap — 101.3% utilization. Against the proposed ceiling, the same balance would represent 75.9%.

That’s a 5,000-tETH increase, or 33.3% above the current cap. For tETH suppliers on Prime, enacting the recommendation would reopen deposit capacity. The filing doesn’t provide a revised borrowing parameter for the asset.

V3 Core moves the other direction entirely. LlamaRisk recommends reducing tETH’s supply cap from 300 to 1, while 286.78 tETH is currently supplied — 95.6% of the existing ceiling. A one-tETH cap would sit 99.7% below the current limit and well below the reported balance.

The proposal also cuts borrow limits for three assets. WBTC’s cap would fall from 4,000 to 1,500 WBTC, a 62.5% reduction. Reported debt stands at 700 WBTC, which is 17.5% of the current cap and 46.7% of the proposed one.

For cbBTC, the borrow cap would drop from 1,440 to 500 cbBTC, a 65.3% cut. The 128 cbBTC of reported debt is 8.9% of the current ceiling and 25.7% of the proposed limit. The lower ceiling leaves more percentage headroom than the WBTC case, but removes 940 cbBTC of absolute borrowing capacity outright.

On Aave V3 Arbitrum, the WETH borrow cap would fall from 135,000 to 75,000 WETH, a 44.4% reduction. Reported debt is 55,461 WETH — 41.1% of the current cap, 73.9% of the proposed one — leaving 19,539 WETH of remaining capacity under the recommendation.

The asymmetry is worth noting. Prime tETH suppliers would gain room; Core tETH suppliers and WBTC, cbBTC, and Arbitrum WETH borrowers would face tighter maximums. The Core tETH case is the sharpest: a one-tETH cap against a reported balance of 286.78 tETH.

V4: capacity follows usage

LlamaRisk’s V4 recommendations add capacity in markets where current balances are pressing against existing limits. On the Ethereum Core Hub Main Spoke, the USDC add cap would rise from $40 million to $50 million. Current additions total 24,584,515 USDC, or 61.5% of the existing cap; at the proposed limit, that falls to 49.2%.

USDT on the same spoke receives the same $10 million increase, moving from $40 million to $50 million. The reported balance is 21,274,629 USDT — 53.2% of the current ceiling and 42.5% of the proposed one.

The Forex Spoke sees larger proportional moves. USDC’s add cap would go from $10 million to $15 million, a 50% increase. The spoke currently shows 8,084,810 USDC added, or 80.8% of the existing cap — 53.9% of the proposed one.

The Forex Spoke’s USDC draw cap would increase from $3.33 million to $5 million, a 50.2% rise. Reported draws are 3,325,802 USDC, which is 99.9% of the current limit and 66.5% of the proposed ceiling. That’s the tightest current-to-cap ratio in the V4 figures LlamaRisk supplied.

USDT on the Forex Spoke would also move from a $10 million to a $15 million add cap. The proposal reports 6,365,003 USDT added, equal to 63.7% of the current limit and 42.4% of the proposed one.

On Avalanche’s Core Hub Main Spoke, USDt would get the largest absolute increase among the listed V4 changes — a doubling from $10 million to $20 million, tied with the Ethereum spoke increases in dollar terms but larger in proportional effect. Current additions of 8,791,525 USDt represent 87.9% of the existing cap; the same balance would be 44.0% of the proposed ceiling.

For V4 liquidity providers, the recommendations open more room before caps bind. Forex Spoke borrowers drawing USDC would also gain headroom. The trade-off is lower supply capacity for Core tETH and lower borrowing capacity for WBTC, cbBTC, and Arbitrum WETH.

A different tool from July’s deprecations

In July, Aave proposed deprecating 50 reserves and winding down six smaller deployments. The Block reported that action as affecting roughly $98.1 million in supplied assets and $15.6 million in debt.

That was about offboarding and wind-downs. The October filings are something different — cap adjustments on named, active markets, adding capacity where V4 balances are close to their limits while lowering selected V3 ceilings. In this desk’s read, the most immediate consequences fall on users whose supply or debt sits directly in the affected reserves.