Aave's risk stewards have approved a series of supply cap increases designed to accommodate surging demand for leveraged restaking strategies across the protocol's V3 deployments. The adjustments, analyzed by LlamaRisk and implemented on Ethereum mainnet and Mantle, reflect the maturing infrastructure around liquid restaking tokens and the sophisticated yield farming mechanics that have emerged around them.
The most significant expansion concerns wrapped rsETH on Mantle, where the token has hit full capacity at 52,000 units. LlamaRisk's recommendation to increase this ceiling to 70,000 responds to consistent user demand driven by a specific arbitrage opportunity: depositing wrsETH as collateral while borrowing WETH through Aave's E-Mode, a permissioned state that allows higher leverage between correlated assets. This looping strategy captures the yield differential between rsETH's restaking returns and WETH borrowing costs. The risk analysis concluded that liquidation exposure remains minimal given the full correlation between collateral and borrowed assets, and the extraordinarily low probability of rsETH experiencing the exchange rate slashing events that would trigger cascade liquidations. Similarly, rsETH itself on Ethereum mainnet has reached 99.9% utilization, prompting a cap increase from 480,000 to 530,000 tokens to serve equivalent restaking positions.
The third adjustment targets Pendle's principal tokens, specifically PT-srUSDe-25JUN2026 on mainnet, with a proposed doubling from 30 million to 60 million units. These derivative positions, which represent claims to future staking yields from Ethena's synthetic dollar, have become vehicles for yield-seeking strategies on Aave. The dramatic expansion suggests confidence in both Pendle's liquidity infrastructure and the sustained demand for fixed-yield farming positions. All three recommendations acknowledge that modern Aave risk management must account for position concentration among sophisticated users executing coordinated strategies rather than treating each asset in isolation. When correlated assets dominate both sides of a lending position, traditional liquidation cascades become far less probable.
These supply cap adjustments illustrate how Aave's governance has shifted toward accommodating complex yield strategies rather than restricting them, provided underlying liquidity and correlation structures support the risk profile. The pattern suggests restaking composability will continue shaping DeFi's collateral landscape throughout 2026.