Aave V4 Raises Caps and Lending Rates in November Risk Steward Update

November 7, 2026 MM Crypto Team

Aave, the largest decentralised lending protocol, is loosening several borrowing and supply limits while raising the cost of borrowing one synthetic dollar. The changes were published on 6 November 2026 by LlamaRisk as “Risk Stewards: Cap and IRM Changes on Aave V4 / 2026.11.06” on the Aave governance forum. They touch Aave V4 on Ethereum, Avalanche and Base. They show how the biggest DeFi lender balances two pressures: letting users borrow and supply more when demand is strong, and keeping the protocol safe when demand concentrates in a few positions. The terms may look technical: caps, draw caps, add caps, base rates and utilisation. Yet the logic is familiar from traditional finance, where a bank sets lending limits, watches its largest borrowers, and adjusts rates when supply and demand shift. Aave does the same, except the rules are in smart contracts and the data is public on-chain. This Aave V4 risk steward update is therefore about more than numbers. It is about why LlamaRisk judged each change safe, and what it means for people who lend or borrow on Aave.

What the Aave V4 risk steward update changes

The update covers six changes across three networks. On Ethereum, LlamaRisk recommended raising the draw cap for USDG on the Core Hub Main Spoke from 63.5 million to 75 million. That creates about 11.5 million of extra borrowing headroom. It also recommended raising the add cap for WBTC on the Prime Hub Bluechip Spoke from 700 to 1,000, and the add cap for cbBTC on the same spoke from 300 to 600. Those changes expand the wrapped bitcoin that can be supplied. The fourth Ethereum change lifts the USDe base rate on the Plus Hub from 6.60 percent to 7.00 percent, making USDe borrowing slightly more expensive. On Avalanche, the draw cap for USDC on the Core Hub Main Spoke rises from 9 million to 15 million, adding 6 million of borrowing capacity. On Base, the add cap for GOOGLc on the Equities Hub MAG7 Spoke rises from 22,000 to 40,000, almost doubling the tokenised equity-linked asset that can be supplied.

Caps, draw caps and add caps explained

A cap in Aave V4 is a ceiling on how much of an asset can be used in a particular hub or spoke. Hubs and spokes are separate lending markets grouped by theme, such as a Core Hub, a Prime Hub or an Equities Hub. A draw cap governs borrowing: the maximum total amount that can be borrowed from that market at one time. Once borrowing reaches the draw cap, no further borrowing is possible until some loans are repaid, even if plenty of the asset is supplied. An add cap governs supplying: the maximum total amount that can be added into that market. Once supply reaches the add cap, no further deposits are accepted until some supply is withdrawn. A market can be constrained on either side, and risk stewards watch both and adjust whichever side is binding. Caps force growth in steps, with a risk review at each step, because without them a single asset could dominate a market and a sudden shock could threaten the whole pool.

Why WBTC and cbBTC caps are rising

The two bitcoin changes illustrate that logic clearly. As of 6 November, the WBTC add cap on the Prime Hub Bluechip Spoke was 53.6 percent utilised, with 375 of the 700 cap already supplied. The cbBTC add cap was considerably tighter, at 78.8 percent utilised, with 236 of the 300 cap supplied. Utilisation is simply the share of the cap already in use. A rate above 50 percent means more than half the allowed supply is already in the market. A rate near 80 percent means the cap is close to binding and new suppliers may soon be turned away. Raising the WBTC add cap to 1,000 and the cbBTC add cap to 600 therefore responds directly to observed demand. Wrapped bitcoin assets are also among the most liquid crypto collateral types, with deep markets on centralised and decentralised exchanges.

The USDG concentration risk

The USDG change is more nuanced and deserves close attention. LlamaRisk recommended raising the draw cap for USDG on the Core Hub Main Spoke on Ethereum from 63.5 million to 75 million, a vote of confidence in demand for borrowing USDG. At the same time, the data published with the recommendation shows that USDG borrowing on the Main Spoke is heavily concentrated. The largest single position accounts for around 27 percent of the total amount drawn. The top three positions together account for around 45 percent, and the top twenty positions account for around 87 percent. A very small number of borrowers control the overwhelming majority of USDG debt, and the single largest borrower alone represents more than a quarter of it. Concentration matters because it changes the risk profile of a market. If borrowing is spread across thousands of small positions, the failure of any one borrower is a minor event. If borrowing is concentrated in a handful of large positions, the behaviour of one borrower can move the whole market.

The USDe rate rise and the base rate

The one change in this LlamaRisk Aave November package that tightens rather than loosens is the USDe base rate on the Plus Hub, rising from 6.60 percent to 7.00 percent. In Aave, the interest rate a borrower pays is set by a curve that starts at a base rate and rises as utilisation increases. Utilisation here means the share of supplied assets that is currently borrowed. When utilisation is low, borrowing is cheap, which encourages more borrowing. When utilisation is high, borrowing becomes more expensive, which discourages further borrowing and encourages more supply. The base rate is the floor of that curve: the rate a borrower pays when utilisation is at its lowest. Raising the base rate from 6.60 percent to 7.00 percent therefore lifts the whole curve by 0.40 percentage points. The reason connects directly to incentives around USDe, because Ethena increased its Liquid Leverage rewards to 5.25 percent APR.

Aave V4 changes against shrinking DeFi TVL

The November update lands while the broader decentralised finance sector is contracting. Total value locked, or TVL, measures how much capital sits in DeFi protocols. It has fallen by roughly 14 percent over the past month, from around 115 billion dollars to around 99 billion dollars, according to Crown Investing. A 14 percent contraction in a month is significant, and it frames the Aave changes in an important way. Aave is not raising caps because the whole sector is booming. It is raising caps in specific markets where demand remains strong even as the sector shrinks. That selectivity is exactly what risk stewardship is for. In a rising market, almost every cap increase looks justified, but in a contracting market the steward must distinguish genuine demand from a rush for leverage that could unwind painfully.

What the changes mean for Aave users

For ordinary users, the practical effects are straightforward. If you want to borrow USDG on Ethereum or USDC on Avalanche, there will soon be more room to do so. If you want to supply WBTC or cbBTC on the Prime Hub Bluechip Spoke, or GOOGLc on the Equities Hub on Base, there will soon be more room for that as well. If you borrow USDe on the Plus Hub, expect to pay slightly more, with the base rate moving from 6.60 percent to 7.00 percent. Weigh that extra cost against the rewards from Ethena’s Liquid Leverage programme. None of these changes requires any action from existing users. The new parameters will be implemented via the Risk Steward process, the mechanism Aave uses to put approved risk adjustments into effect without a full governance vote on every small change. Implemented changes can be reviewed afterwards on the LlamaRisk Risk Stewards Dashboard. LlamaRisk is an independent DeFi risk service provider funded in part by the Aave DAO, the decentralised organisation that governs Aave.

Frequently asked questions

What is a Risk Steward in Aave?

A Risk Steward is a trusted risk team authorised to make limited parameter changes, such as cap increases and interest rate adjustments, within bounds approved by Aave governance. LlamaRisk acts in this role and publishes its recommendations publicly before implementation.

What is the difference between a draw cap and an add cap?

A draw cap limits how much of an asset can be borrowed from a market, while an add cap limits how much can be supplied into it. Raising a draw cap creates more borrowing room; raising an add cap creates more room for deposits.

Why is the USDe borrowing rate rising if utilisation is only 1.6%?

Because Ethena increased Liquid Leverage rewards to 5.25 percent APR, which improves the economics for USDe borrowers. LlamaRisk raised the base rate from 6.60 percent to 7.00 percent to keep Aave’s pricing aligned with those rewards.

Should I worry about USDG borrowing concentration?

Concentration means a few large borrowers hold most of the debt, so their behaviour matters more than in a widely spread market. LlamaRisk still recommended raising the cap, which suggests the positions were judged healthy, but concentration is a risk factor worth monitoring.

Where can I check the implemented changes?

Implemented changes can be reviewed on the LlamaRisk Risk Stewards Dashboard, which records the parameter changes made through the Risk Steward process.

Source: Aave Governance/LlamaRisk

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