Aave reopens frozen markets but blocks new collateral loans
LlamaRisk reports the main emergency batches executed, while available liquidity and collateral rules still determine practical access. Read the full story on CryptoSlateUnderstand the crypto stories that matter and what to watch next. Get The Catalyst in your inbox
Emergency cap cuts at Aave preserve borrowing room to return to pre-Binance hot-wallet levels, even as LlamaRisk estimates they remove roughly $3.8 billion of unused capacity.
In an Oct. 30 update, risk service provider LlamaRisk said it had executed lower borrowing ceilings and temporary interest-rate changes on Aave V3 and V4. GHO borrow-cap cuts on the Core and Prime markets remained queued.
The measures follow an Oct. 29 emergency freeze, after LlamaRisk’s initial assessment described the exploiter’s Aave position as overcollateralized and subject to normal liquidation.
Aave V4’s draw caps apply to individual credit lines through which a lending market, called a spoke, draws assets from a shared hub. While a reserve remains frozen, those ceilings cannot enable new borrowing.
LlamaRisk’s cap methodology starts with the larger of borrowing before the exploit and borrowing at its observation time, then adds roughly 2%, with asset-specific rounded ceilings. It targets the larger borrowing paths with more than $10 million borrowed before the incident and more than $10 million of spare capacity.
That approach can sharply reduce an old ceiling while keeping it above earlier debt.
| Asset | Listed cap | Borrowing before exploit | Room above earlier borrowing |
|---|---|---|---|
| USDT | 2,560 million USDT | 2,504.7 million USDT | 55.3 million USDT |
| USDC | 2,270 million USDC | 2,215.9 million USDC | 54.1 million USDC |
Debt repayments can leave more room beneath the same ceiling. Core USDC’s listed cap was approximately 248.4 million USDC above debt as of Oct. 30 because borrowing had fallen below its pre-exploit level.
Core WETH listed ceiling of 1.79 million WETH was above then-current debt of 1,749,730 WETH. LlamaRisk said current debt was the sizing basis because it included the exploiter’s 19,762 WETH loan.
Separately, the queued GHO changes would cut Core’s ceiling from 150 million to 105 million GHO and Prime’s from 85 million to 35 million, a combined reduction of 95 million GHO.
During the freeze, new supply and borrowing were blocked while withdrawals, repayments, and liquidations remained enabled. Users also could not supply extra collateral to frozen reserves.