LlamaRisk Proposes Aave V3 Cap and Rate Updates Across Core, Base, Mantle, X Layer and Horizon

Core market nears wstETH borrow limit

On Aave V3 Core, LlamaRisk proposed raising the wstETH borrow cap from 7,000 to 14,000 after usage climbed to 99.4% of the current ceiling. The reserve has 6,956 wstETH borrowed against the 7,000 cap, leaving almost no room for additional borrowing.

According to the review, the top wstETH borrowers show health factors ranging from 1.00 to 4.17, with a median of 1.12, and most of the group sits below 1.15. Their debt is backed mainly by weETH and WETH rather than stablecoins, meaning account health is tied largely to the spread between closely related ETH-based assets. If approved, the new cap would amount to about 2.01 times current borrows and lower utilization to roughly 49.7%.

Mantle and Horizon supply caps set for increases

On Aave V3 Mantle, USDe supply has reached 96.6% of its cap, with 19.3 million supplied out of a 20 million limit. LlamaRisk recommended doubling that cap to 40 million, which would reduce utilization to about 48.3% based on current balances.

The report said the supplier base is highly concentrated, with the largest wallet holding about 68.6% of supply and the top three accounting for roughly 99.6%. Three of the four biggest suppliers also have debt positions with health factors between 1.03 and 1.04, using USDe and sUSDe as collateral in Mantle stablecoin E-Mode categories while borrowing USDT0. LlamaRisk said those positions are correlated because USDe on Aave is priced through the USDT/USD feed, which it said reduces liquidation risk.

On Aave V3 Horizon, the proposal calls for increasing the USCC supply cap from 5.6 million to 7.5 million. USCC, described in the post as the Superstate Crypto Carry Fund token, is already at 92.0% cap utilization with 5,149,882 supplied. The top supplier holds around 59.6% of supply, the top three hold 78.6%, and all leading suppliers carry debt with health factors between 1.04 and 1.11. Their borrowings are entirely in stablecoins, approximately 46.5 million RLUSD and 9.6 million GHO. The higher cap would bring utilization down to about 68.7%.

Interest-rate model changes target Base and X Layer

For Aave V3 Base, LlamaRisk proposed lowering WETH Slope1 from 2.50% to 2.30% and raising optimal utilization from 90% to 92%. The base rate and Slope2 would remain unchanged. The post said this implements the Risk Stewards’ September 2026 WETH interest-rate adjustment on Base previously published by TokenLogic.

At the current 82.4% utilization level, the adjusted model would reduce the variable borrow rate to 2.06% APR from 2.29% under the existing settings. LlamaRisk also noted that lifting the optimal point by two percentage points shifts some withdrawal liquidity into additional borrowing capacity at the reserve’s intended operating level.

On Aave V3 X Layer, the recommendation is to raise USDC Slope1 from 4.00% to 4.50% while leaving the base rate, optimal utilization and Slope2 unchanged. That would move the rate at the optimal point from 4.00% to 4.50% APR and the rate at full utilization from 44.00% to 44.50% APR. With utilization currently at 1.0%, the variable borrow rate would edge up to 0.05% APR from 0.04%. The reserve presently holds 102 USDC supplied and 1 USDC borrowed, which the post said means there is no material outstanding position affected by the change.

What happens next

The recommendations were presented as a Risk Steward action rather than a broad new governance overhaul, and the post frames them as routine parameter adjustments based on current reserve conditions. The confirmed next step in the source is implementation through the Risk Steward process if the changes proceed.

Taken together, the proposals mostly address reserves that are close to existing caps, while the rate-model edits on Base and X Layer make narrower changes to borrowing incentives and available liquidity without altering other core parameters.