Aave may sharply reduce unused borrowing headroom across parts of its lending system after a proposal from risk service provider LlamaRisk. According to the Aave governance forum, the proposal calls for lower borrow caps on 27 reserves in Aave V3 and lower draw caps on six credit lines in Aave V4. The new limits would be set at roughly 1.02x pre-attack borrowing levels.
The move follows Aave’s earlier decision to freeze V3 and V4 reserves after the Oct. 29 Binance hot wallet incident. If implemented, the changes would remove about $3.7 billion in unused capacity from V3 and another $130 million from V4. In one example cited for V3 Core, the WETH borrow cap would be reduced from 2.4 million tokens to 1.79 million, while USDT and USDC caps would be lowered to 2.56 billion and 2.27 billion respectively.
LlamaRisk said the attacker still holds large amounts of ETH, stablecoins and governance tokens, creating the risk of quickly building large positions once markets are unfrozen. The proposed cap changes would be executed through the Risk Steward process before reserves are unfrozen in stages. GHO reserves are not included in this round of adjustments.
Aave is considering lower borrowing limits across V3 and V4 after risk service provider LlamaRisk submitted a proposal on the Aave governance forum.
The proposal would reduce borrow caps for 27 reserves on Aave V3 and draw caps for six credit lines on Aave V4. The new limits would be set at about 1.02x pre-attack borrowing levels.
Aave had already frozen V3 and V4 reserves following the Oct. 29 Binance hot wallet incident.
If adopted, the adjustment would remove about $3.7 billion in unused capacity from V3 and about $130 million from V4. In the V3 Core market, the WETH borrow cap would be cut from 2.4 million tokens to 1.79 million. The USDT and USDC caps would be lowered to 2.56 billion and 2.27 billion, respectively.
LlamaRisk said the attacker still holds large amounts of ETH, stablecoins and governance tokens, and could quickly build large positions after the market is unfrozen. The changes would be carried out through the Risk Steward process before reserves are unfrozen in stages. GHO reserves are not part of the current adjustment.
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