Risk Stewards: Supply and Borrow Cap Reductions on Aave V3 / 2026.07.01

Summary LlamaRisk recommends the following parameter changes based on user behavior, on-chain liquidity, and position health observed in the latest review of Aave V3 reserves. Aave V3 Linea: Reduce supply cap for WETH from 7,950 to 6,250. Reduce borrow cap for WETH from 7,150 to 2,370. Reduce supply cap for weETH from 5,000 to 2,880. Reduce supply cap for USDC from 20,000,000 to 2,320,000. Reduce borrow cap for USDC from 18,000,000 to 1,180,000. Reduce supply cap for USDT from 20,000,000 to 708,000. Reduce borrow cap for USDT from 18,000,000 to 378,000. Reduce supply cap for mUSD from 500,000 to 55,700. Reduce borrow cap for mUSD from 450,000 to 18,200. Reduce supply cap for WBTC from 40 to 14. Reduce supply cap for wstETH from 500 to 267. Cap Reductions These changes reduce the protocol’s maximum exposure across the active reserves on Aave V3 Linea. Each reserve carries idle headroom between current balances and its caps. Supply caps are set to a limited margin above current outstanding supply on every reserve, and on the reserves with active borrowing (WETH, USDC, USDT, mUSD) borrow caps are brought down toward current outstanding borrowing. Existing positions remain unaffected and can be unwound at the holder’s discretion. Current outstanding balances and cap utilization are shown below; the resulting caps appear in the Specification. Instance Asset Supplied Supply util Borrowed Borrow util Aave V3 Linea WETH 5,215 65.6% 3,386 47.4% Aave V3 Linea weETH 2,401 48.0% — — Aave V3 Linea USDC 1,934,886 9.7% 1,686,025 9.4% Aave V3 Linea USDT 590,751 3.0% 540,749 3.0% Aave V3 Linea mUSD 46,423 9.3% 26,083 5.8% Aave V3 Linea WBTC 11.86 29.6% — — Aave V3 Linea wstETH 223 44.6% — — Exit Liquidity On-chain DEX liquidity for the two largest non-stablecoin reserves is thin relative to current deposits. The curves below map realized slippage against sell size, taking the best route across Linea DEX liquidity into USDC. The dashed line marks the reserve’s liquidation bonus, the slippage beyond which a liquidator selling seized collateral no longer clears the incentive. WETH reaches its 6% liquidation bonus in slippage at approximately USD 41,000 of sell size, against USD 8.4M supplied, and exceeds 15% slippage by approximately USD 72,000. Source: LlamaRisk, July 1, 2026 WBTC reaches its 7% liquidation bonus in slippage at approximately USD 27,000 of sell size, against USD 716,000 supplied, and exceeds 15% slippage by approximately USD 43,000. Source: LlamaRisk, July 1, 2026 Specification Instance Asset Current Supply Cap Recommended Supply Cap Current Borrow Cap Recommended Borrow Cap Aave V3 Linea WETH 7,950 6,250 7,150 2,370 Aave V3 Linea weETH 5,000 2,880 — — Aave V3 Linea USDC 20,000,000 2,320,000 18,000,000 1,180,000 Aave V3 Linea USDT 20,000,000 708,000 18,000,000 378,000 Aave V3 Linea mUSD 500,000 55,700 450,000 18,200 Aave V3 Linea WBTC 40 14 1 — Aave V3 Linea wstETH 500 267 — — Next Steps We will move forward and implement these updates via the Risk Steward process. Disclosure This review was independently prepared by LlamaRisk, a DeFi risk service provider funded in part by the Aave DAO. LlamaRisk is not directly affiliated with the protocol(s) reviewed in this assessment and did not receive any compensation from the protocol(s) or their affiliated entities for this work. The information provided should not be construed as lega 1 post - 1 participant Read full topic