LlamaRisk, the risk management entity overseeing Aave's parameter governance, has recommended increases to both supply and borrow caps across multiple V3deployments based on current utilization patterns and borrower health metrics. The proposals reflect a measured approach to expanding capacity while monitoring the underlying collateral compositions and leverage profiles driving demand on each instance.
On Aave V3 Core, USDtb—the protocol's stablecoin denomination native to the platform—has reached complete saturation at its 140 million borrow cap. The recommendation to raise this threshold to 182 million emerges from analysis of the borrower cohort, which is overwhelmingly composed of leveraged Bitcoin positions. Top borrowers maintain health factors between 1.01 and 2.64 (median 1.46), with collateral split across WBTC, tBTC, cbBTC, and LBTC variants. This concentration in BTC-backed stablecoin borrowing creates a specific risk vector: the protocol's exposure to Bitcoin-to-stablecoin spread dynamics, where rapid depreciation in the underlying asset could cascade into liquidations. The fully saturated borrow leg suggests genuine protocol demand rather than speculative positioning, justifying the 30% increase from organic growth in this leverage product.
The second recommendation concerns cbETH on Aave V3 Base, where the Coinbase staking derivative currently sits at 84.2% supply cap utilization. LlamaRisk proposes lifting the ceiling from 15,000 to 23,000 cbETH, targeting approximately $55 million at current oracle pricing. Analysis of the top twenty suppliers reveals that eighteen carry outstanding debt positions, primarily in WETH (12 users, $24.9 million aggregate) and USDC (six users, $3.2 million). This structure essentially converts Ethereum staking yield into leverage on Ethereum itself—suppliers deposit cbETH, borrow WETH, and pocket the spread between staking returns and borrowing costs. The health factor distribution (median 1.53) indicates moderate risk tolerance, though the correlated nature of the position means drawdowns compound across collateral and liability simultaneously.
These recommendations underscore a broader principle in Aave governance: capacity expansion should follow, not precede, demonstrated demand. Both proposals emerge from near-saturation conditions where borrowers and suppliers have signaled strong conviction through actual utilization. The risk analysis also highlights how modern DeFi leverage increasingly clusters around specific collateral archetypes—Bitcoin stablecoin carries and Ethereum yield farming—each with distinct liquidation triggers and correlation profiles. As these strategies mature, governance must balance access with prudent monitoring of position concentration.