LlamaRisk Proposes Aave V4 Cap Increases on Ethereum, Avalanche and Base

Main changes across three networks

On Ethereum, LlamaRisk recommended increasing the USDG draw cap on the Core Hub Main Spoke to 75 million from 63.5 million. It also proposed lifting the WBTC add cap on the Prime Hub Bluechip Spoke to 1,000 from 700 and the cbBTC add cap to 600 from 300. Separately, the firm suggested raising the USDe base rate on the Plus Hub to 7.00% from 6.60%, while leaving the optimal usage ratio at 90.00% and the other slope parameters unchanged.

On Avalanche, the proposed change is a higher USDC draw cap on the Core Hub Main Spoke, moving to 15 million from 9 million. On Base, LlamaRisk recommended higher add caps for three MAG7 tokenized equity reserves: GOOGLc to 40,000 from 22,000, METAc to 10,000 from 5,800, and NVDAc to 35,000 from 24,000.

Why USDG, USDC and USDe were flagged

For USDG on Ethereum’s Core Hub, LlamaRisk said borrowing is concentrated, with the largest position accounting for about 27% of the drawn amount, the top three about 45%, and the top twenty about 87%. The biggest borrowers mainly post ETH-linked collateral such as weETH, WETH and wstETH, sometimes alongside WBTC and cbBTC, with health factors ranging from 1.15 to 3.18 and a median of 1.42. Under the proposal, post-change draw cap utilization would be about 71.0%, after which the available USDG liquidity on the Core Hub, reported at 7.60 million, would become the practical limit on further draws.

For Avalanche USDC, borrowing was described as highly concentrated. The largest position represents about 51% of the drawn amount, the top three about 69%, and the top twenty about 96%. Those borrowers hold USDC debt against BTC.b, WAVAX and WETH.e collateral, with WAVAX the largest by value. Health factors were reported between 1.09 and 9.37, with a median of 1.58. LlamaRisk said a 15 million draw cap would leave post-change utilization near 46.0%, at which point 1.67 million of available USDC liquidity on the Core Hub would be the limiting factor.

The USDe change was tied to incentives rather than cap pressure. LlamaRisk said Ethena had increased Liquid Leverage rewards to 5.25% APR, prompting a recommendation to move the base drawn rate to 7.00%. As of November 6, 2026, USDe on the Plus Hub had 29.89 million added and 0.47 million drawn, equal to hub utilization of 1.6%. The firm said the adjustment would raise the USDe borrow rate by 0.40 percentage points at every utilization level.

Bitcoin-backed reserves on Ethereum

LlamaRisk said WBTC supply on the Ethereum Bluechip Spoke is moderately concentrated. The largest position holds about 14% of the reserve, the top three about 36%, and the top twenty about 74%. Those top suppliers all borrow stablecoins against WBTC, mainly USDC and USDT, with smaller use of USDG and frxUSD. Reported health factors ranged from 1.10 to 5.27, with a median of 1.65.

As of November 6, 2026, the WBTC add cap was 53.6% utilized, or 375 out of 700. Raising the cap to 1,000 would bring utilization down to about 37.5%. For cbBTC, the reserve was described as more concentrated, with the two largest positions each holding about 26% of supply and the top three about 60%. The add cap was 78.8% utilized, or 236 out of 300, and the proposed increase to 600 would lower utilization to roughly 39.4%.

Base MAG7 equity caps move higher

The Base proposals focus on three tokenized equity assets on the Equities Hub MAG7 Spoke. GOOGLc was 84.6% utilized as of November 6, with 18,606 supplied against a 22,000 cap. LlamaRisk said raising the cap to 40,000 would reduce utilization to about 46.5%. The reserve was described as concentrated, with the largest position at roughly 28% and the top three at 66%, while fifteen of the top twenty positions borrow USDC against GOOGLc.

METAc showed even tighter cap usage at 89.2%, or 5,174 out of 5,800, and would fall to about 51.7% under a 10,000 cap. NVDAc stood at 65.6% utilization, or 15,748 out of 24,000, and would drop to around 45.0% if the cap is increased to 35,000. LlamaRisk said both reserves are concentrated and that most of the top positions borrow USDC against the tokenized equities, sometimes alongside other equity collateral.

Next step is Risk Steward implementation

LlamaRisk said it plans to move forward with these updates through the Risk Steward process, the mechanism used to implement the recommended parameter changes. The resulting adjustments, once enacted, are expected to be reflected on the LlamaRisk Risk Stewards Dashboard.

The review was disclosed as independent work prepared by LlamaRisk, a DeFi risk service provider funded in part by the Aave DAO. The firm said it is not directly affiliated with the protocols assessed and did not receive compensation from the protocol or related entities for this review.