Risk Stewards: Supply Cap Increase on Aave V3 MegaETH / 2026.05.09

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 MegaETH: Increase supply cap for USDe from 400,000,000 to 800,000,000. USDe (Aave V3 MegaETH) USDe has reached 99.5% supply cap utilization (398,103,284 / 400,000,000) on the Aave V3 MegaETH instance. The reserve refilled to near its ceiling within three days of the prior cap raise from 200,000,000 to 400,000,000, indicating sustained loop demand on this market. Supply Distribution Source: LlamaRisk, May 9, 2026 The top twenty USDe supply positions hold USDe collateral against USDm debt in stablecoin E-Mode, with health factors between 1.01 and 1.10 (median 1.04). It is notable that the strategy remains significantly concentrated, with the largest supplier of USDe responsible for more than 50% of the market share. Because both legs of the loop are dollar-pegged stablecoins, health factor degradation in this strategy depends on relative peg drift between USDe and USDm rather than on directional asset-price movement, making the liquidations constrained to highly unlikely USDe insolvency scenarios. Recommendation Given the stable-stable loop structure on the USDe and USDm pair, the dollar-peg correlation that bounds health factor degradation in the cohort, and full saturation of the existing 400M cap three days after the prior raise, we recommend raising the supply cap for USDe on Aave V3 MegaETH from 400,000,000 to 800,000,000. This change will also allow for constrained new exposure on USDm borrow side until the borrow caps for USDm are lifted. The borrow cap remains unchanged at 40,000,000. Specification Instance Asset Current Supply Cap Recommended Supply Cap Current Borrow Cap Recommended Borrow Cap Aave V3 MegaETH USDe 400,000,000 800,000,000 40,000,000 — 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 legal, financial, tax, or professional advice. 2 posts - 1 participant Read full topic