Aave Proposes Cutting V3 and V4 Borrow Caps, Removing About $3.8B in Unused Borrowing Capacity

October 30 — According to the Aave governance forum, risk service provider LlamaRisk has proposed lowering the borrow caps for a total of 27 reserves on Aave V3 and the draw caps for a total of 6 credit lines on Aave V4, with the new caps set at roughly 1.02 times the pre-attack borrowing amounts. Aave had already frozen its V3 and V4 reserves following the October 29 Binance hot wallet incident. The adjustment will remove approximately $3.7 billion of unused capacity on V3 and about $130 million on V4. Taking V3 Core as an example, the WETH borrow cap will be cut from 2.4 million to 1.79 million, while the USDT and USDC caps will 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 establish large positions once the market is unfrozen. The adjustments will be executed through the Risk Steward process ahead of the phased unfreezing; GHO reserves are not covered by this adjustment.