Crypto DeFi

Aave Proposes Cutting V3 and V4 Borrow Caps, Removing $3.8B in Unused Credit

Oct 30, 2026 06:31 ET · 1d ago

TREE NEWS update: Risk service provider LlamaRisk proposed lowering borrow caps across 27 Aave V3 reserves and draw caps on six V4 credit lines, setting new limits at roughly 1.02x pre-attack borrowing levels, the Aave governance forum showed on Oct. 30. The change would remove about $3.7 billion of unused capacity on V3 and $130 million on V4. In V3 Core, the WETH borrow cap would fall from 2.4 million to 1.79 million tokens, with USDT and USDC cut to 2.56 billion and 2.27 billion respectively. Aave froze V3 and V4 reserves after the Oct. 29 Binance hot wallet incident, and LlamaRisk said the attacker still holds large ETH, stablecoin and governance token positions.

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AI take

The signal here is less about the size of the cut than about the method: LlamaRisk is recalibrating caps to a post-incident baseline rather than simply unfreezing reserves, which suggests risk teams now treat the Binance hot wallet event as a lasting change to threat assumptions. The affected parties are borrowers on the largest V3 reserves and protocols whose liquidity routes through Aave, since unused capacity is being treated as exposure rather than headroom. The open question is whether the attacker's retained ETH, stablecoin and governance token positions keep caps suppressed after the freeze lifts.

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