Aave to Lower Borrowing Caps Before Phased Unfreezing to Prevent Attackers in Binance Hack Incident from Establishing Large Positions

October 30: DeFi risk and transparency service provider LlamaRisk posted on the Aave governance forum stating that before the phased unfreezing of Aave V3 and V4, it will lower borrowing caps in major lending markets through the Risk Steward mechanism to prevent attackers from the Binance exploit incident, who still hold large amounts of ETH, stablecoins, and governance tokens, from using remaining borrowing capacity to establish large positions in the first few blocks after unfreezing.

This adjustment will reduce idle borrowing capacity by approximately $3.7 billion on Aave V3 and approximately $130 million on Aave V4. According to LlamaRisk data, Aave V3 and V4 reserves were previously frozen due to the Binance exploit incident, and attackers have already borrowed 19,762 WETH on Aave V3 Core. This adjustment targets markets where pre-incident borrowing exceeded $10 million and where more than $10 million of headroom remained below the cap; the new cap takes the larger of the pre-incident borrowing amount and the current borrowing amount and adds 2%.

The adjustment covers assets including WETH, USDT, and USDC across multiple instances such as Aave V3 Core, Base, Arbitrum, and Plasma. For example, the WETH borrowing cap on Aave V3 Core will be reduced from 2.4 million tokens to 1.79 million tokens, and the USDT borrowing cap will be reduced from 3.09 billion tokens to 2.56 billion tokens. LlamaRisk stated that as borrowing demand recovers later, borrowing caps can be raised again through the regular process.