LlamaRisk proposes Aave V3 and V4 cap and rate changes

LlamaRisk filed a new batch of Aave risk-parameter recommendations on Nov. 3, 2026, covering V4 reserves on Ethereum and Avalanche and V3 reserves on X Layer and Avalanche. LlamaRisk is a DeFi risk service provider funded in part by the Aave DAO. The Aave Governance proposal has the V4 cap and interest-rate-model specifics.

Four days earlier the firm had moved the other way. On Oct. 30, LlamaRisk proposed trimming borrowing limits ahead of an Aave market reopening — that filing targeted roughly $3.7 billion in unused borrowing capacity on V3 and about $130 million on V4, as TechFlowPost reported. The Nov. 3 batch adds capacity across several V4 markets—most notably where some caps were near full—and adjusts USDC pricing between V4 hubs.

On Aave V4 Ethereum, the USDC$0.9994▲0.01% draw cap on the Core Hub Main Spoke is proposed to rise from 36 million to 40 million. As of Nov. 3, 34.25 million was drawn — 95.1% of the current cap. The same balance against the proposed ceiling would be 85.6%.

The USDT$0.9990▲0.03% draw cap on that same spoke is proposed to increase from 15.6 million to 20 million. Reported usage was 14.42 million, or 92.5% of the current limit, which falls to 72.1% under the proposed one.

Rate changes run in opposite directions depending on which hub. LlamaRisk recommends raising USDC slope1 on the Core Hub from 5.00% to 5.50%, while cutting slope1 on the Prime Hub from 5.00% to 4.50%. The filing puts the Prime Hub USDC borrow rate at 4.83% before the change and 4.35% afterward — a reduction of 0.48 percentage points. The proposal lowers the stated Prime Hub USDC borrow rate, while increasing the Core Hub’s slope1 parameter; the filing does not state a resulting Core Hub borrow rate. The two hubs get distinct settings, not a single Ethereum-wide adjustment.

Other Ethereum V4 limits also move up. The WETH draw cap on the Core Hub EtherFi Spoke is proposed to rise from 41,100 to 45,000, after reported usage of 36,550 — 88.9% of the old limit, 81.2% of the proposed one. The weETH add cap on the Core Hub Main Spoke would go from 22,000 to 25,000; reported usage of 18,365 drops from 83.5% of the old cap to 73.5% of the new one.

Avalanche gets larger increases on V4. The USDt add cap on the Avalanche Core Hub Main Spoke is proposed to rise from 60 million to 110 million. Usage sat at 55.03 million — 91.7% of the current cap, 50.0% of the proposed one. On the Core Hub Ethena Ecosystem Spoke, LlamaRisk recommends doubling the USDt draw cap from 50 million to 100 million and doubling the USDe add cap from 60 million to 120 million. Reported usage was 30.06 million for USDt and 34.22 million for USDe, equal to 30.1% and 28.5% of the proposed caps respectively. The WAVAX add cap on the Avalanche Main Spoke is proposed to double from 2 million to 4 million; reported supply of 1.85 million would sit at 46.3% of the new limit.

The V3 recommendations are narrower. The reported borrowed amount was 25,380,870 — 72.5% of the current cap, dropping to 36.3% of the proposed one.

On Avalanche V3, LlamaRisk proposes cutting the WAVAX supply cap from 14 million to 12 million. Reported supply was 16,229,566, already 115.9% of the current cap — meaning the existing ceiling is already breached. Under the proposed one, that balance would be 135.2% of the limit, a shortfall of 4,229,566 WAVAX. This one doesn’t add headroom; it removes it — which, in our reading, appears to be a deliberate tightening.

Our reading of the Nov. 3 recommendations is that they do not apply a uniform posture: heavily used V4 Ethereum spokes get measured increases, several Avalanche V4 limits roughly double, the Prime Hub USDC slope falls, and Avalanche V3’s WAVAX ceiling is proposed below reported supply. LlamaRisk’s stated basis is its regular review of reserves using user behavior, on-chain liquidity, and position health.