Risk Stewards: Supply Cap Changes on Aave V3 / 2026.05.18

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 Core: Increase supply cap for PT-USDG-28MAY2026 from 120,000,000 to 180,000,000. Reduce supply cap for cbBTC from 22,000 to 19,000. Reduce supply cap for weETH from 1,110,000 to 1,075,000. Reduce supply cap for wstETH from 850,000 to 810,000. Reduce supply cap for FBTC from 520 to 175. Aave V3 Prime: Reduce supply cap for wstETH from 100,000 to 62,000. Aave V3 Base: Increase supply cap for cbETH from 5,000 to 7,500. Aave V3 MegaETH: Increase supply cap for wstETH from 12,000 to 18,000. Increase supply cap for BTC.b from 120 to 180. cbETH (Aave V3 Base) cbETH has reached 100.0% supply cap utilization (4,999 / 5,000) on the Aave V3 Base instance. Supply Distribution Source: LlamaRisk, May 18, 2026 The top twenty cbETH suppliers run health factors between 1.03 and 12.16 with a median of 1.50, and 18 of 20 carry debt. Twelve borrow USDC against the cbETH collateral and seven borrow WETH, so the supplier base mixes stablecoin borrowing and ETH-correlated borrowing rather than concentrating on a single asset. Recommendation Given persistent demand at the cap and a correlated-pair collateral profile, we recommend increasing the supply cap from 5,000 to 7,500. wstETH (Aave V3 MegaETH) wstETH has reached 99.9% supply cap utilization (11,983 / 12,000) on the Aave V3 MegaETH instance. Supply Distribution Source: LlamaRisk, May 18, 2026 The top twenty wstETH suppliers run health factors between 1.03 and 2.60 with a median of 1.48, with 19 of 20 carrying outstanding debt. Twelve borrow USDe against wstETH collateral and five borrow USDm; two have WETH debt. The dominant structure is a stablecoin-debt position against the LST rather than an ETH-correlated pair, so HF degradation in the cohort depends on the wstETH-vs-stable price spread rather than directional ETH risk. Recommendation Given the cap is fully utilized and the positions use conservative HF’s, we recommend increasing the supply cap from 12,000 to 18,000. BTC.b (Aave V3 MegaETH) BTC.b has reached 100.0% supply cap utilization (119.99 / 120) on the Aave V3 MegaETH instance. Supply Distribution Source: LlamaRisk, May 18, 2026 The top sixteen BTC.b suppliers run health factors between 1.10 and 2.72 with a median of 1.43, with 14 of 16 carrying outstanding debt. Nine borrow USDe against BTC.b collateral and two borrow USDT0, so the dominant structure is stablecoin debt against BTC. Recommendation Given the cap is fully utilized and the supplier base is dominated by stablecoin-debt positions against BTC collateral, we recommend increasing the supply cap from 120 to 180. PT-USDG-28MAY2026 (Aave V3 Core) PT-USDG-28MAY2026 has reached 99.0% supply cap utilization (118,777,032 / 120,000,000) on the Aave V3 Core instance. The PT matures on 2026-05-28. Supply Distribution Source: LlamaRisk, May 18, 2026 The top twenty PT-USDG suppliers carry health factors between 1.00 and 20.10 with a median of 1.03, and all twenty carry debt. Seventeen borrow USDC against the PT-USDG collateral, six borrow USDe, and five borrow USDT, consistent with a fixed-yield carry trade running in the stablecoin E-Mode. Because PT-USDG redeems one-to-one against USDG at maturity, the tight HF cluster reflects the small stablecoin-vs-stablecoin price spread rather than directional risk. Liquidity Source: LlamaRisk, May 18, 2026 The primary trading venue is the Pendle AMM pool on Ethereum, which holds $54.82M in total liquidity. The pool composition is 84% SY / 16% PT, indicating adequate exit depth relative to outstanding PT supply on Aave. Recommendation Given full cap utilization, adequate Pendle AMM depth, and a near-term maturity that bounds residual risk to the redemption window, we recommend increasing the supply cap from 120,000,000 to 180,000,000. Cap Reductions cbBTC on Aave V3 Core sits at 75.3% supply cap utilization (16,564 / 22,000). The proposed cap of 19,000 is approximately 1.15x current outstanding supply, landing at approximately 87.2% post-change cap utilization. weETH on Aave V3 Core sits at 91.5% supply cap utilization (1,015,286 / 1,110,000). The proposed cap of 1,075,000 is approximately 1.06x current outstanding supply, landing at approximately 94.4% post-change cap utilization. wstETH on Aave V3 Core sits at 77.8% supply cap utilization (661,179 / 850,000). The proposed cap of 810,000 is approximately 1.22x current outstanding supply, landing at approximately 81.6% post-change cap utilization. fBTC on Aave V3 Core sits at 25.3% supply cap utilization (131 / 520 fBTC). The proposed cap of 175 is approximately 1.33x current outstanding supply, landing at approximately 75.1% post-change cap utilization. wstETH on Aave V3 Prime sits at 50.7% supply cap utilization (50,677 / 100,000). The proposed cap of 62,000 is approximately 1.22x current outstanding supply, landing at approximately 81.7% post-change cap utilization. Specification Instance Asset Current Supply Cap Recommended Supply Cap Aave V3 Core PT-USDG-28MAY2026 120,000,000 180,000,000 Aave V3 Core cbBTC 22,000 19,000 Aave V3 Core weETH 1,110,000 1,075,000 Aave V3 Core wstETH 850,000 810,000 Aave V3 Core FBTC 520 175 Aave V3 Prime wstETH 100,000 62,000 Aave V3 Base cbETH 5,000 7,500 Aave V3 MegaETH wstETH 12,000 18,000 Aave V3 MegaETH BTC.b 120 180 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. 1 post - 1 participant Read full topic