Aave Risk Management Committee Proposes Dynamic Borrowing Cap Plan

On November 14, disclosures from the Aave governance forum revealed that risk management firm LlamaRisk proposed the LlamaGuard Caps plan to introduce dynamic borrowing caps for Aave V3 to limit the borrowing growth rate of various reserve assets.

The proposal aims to automatically replenish available borrowing limits based on demand, while reducing excess limits following large repayments or liquidations. Cap increases will be calculated by Chainlink CRE, with associated boundaries enforced on-chain. Approved large borrowers and institutional clients may borrow through a dedicated channel. The proposal remains in the proposal stage.