LlamaRisk, a risk provider funded in part by the Aave DAO, proposed on November 8 to raise the supply cap for Ethena's USDe on Aave V3 Core from 550 million to 750 million and to lift the USDC borrow cap from 2.6 billion to 2.75 billion. The recommendation follows a rapid doubling of the cap on November 6, when it was raised from 275 million to 550 million. By November 8, the new limit was fully used, and the largest USDe supplier's share had jumped from about 27 percent to roughly 61 percent, holding an estimated 335 million USDe out of 550 million in deposits.
The review also showed that 18 of the 20 largest USDe suppliers were borrowing, with their debt described as almost entirely USDC and USDT. Outstanding USDC debt on Aave Core rose from about 2.2 billion to 2.57 billion between the two reviews, pushing utilization from roughly 74 percent to 90 percent. Three of the largest USDC borrowers had posted USDe and three had posted sUSDe, Ethena's staked version. LlamaRisk linked the demand in part to Ethena Labs' Liquid Leverage program, which offers promotional rewards for depositing USDe and sUSDe and borrowing against them; Ethena raised those rewards to 5.25 percent APR.
Aave's USDC cap was tightened after an October 29 incident in which a Binance hot wallet on Ethereum sent about 167,464 ETH to a single address. Aave froze reserves, and LlamaRisk cut borrow caps the next day, removing roughly 3.7 billion in unused capacity. Core's USDC cap fell from 2.7 billion to 2.27 billion before the November 6 review raised it back to 2.6 billion. The proposed 2.75 billion would move it above the pre-incident level for the first time. LlamaRisk calculates that filling the proposed cap at current supply would put USDC utilization at 96.6 percent, above the interest-rate model's 94 percent optimal point, pushing the variable borrow rate to around 8.8 percent and closer to a steeper part of the curve.
Among indebted top-20 USDe suppliers, the median health factor is 1.03, within a range of 1.02 to 2.30. At 1.03, weighted collateral can lose about 2.9 percent against unchanged debt before liquidation. LlamaRisk notes that matched-asset loops on Aave often run this thin, but concentration remains the central concern: the top five suppliers hold 91 percent of Core USDe, and exit liquidity for USDe is not quantified. A large exit would have to route through USDC and USDT reserves or rely on secondary-market depth, because Ethena limits direct redemption to onboarded Mint Users.
Separately, Montra announced on November 7 that Saffron vaults are live on its token launchpad, letting liquidity providers sell a Uniswap position's trading fees upfront. In Saffron's structure, the fixed side is the seller who deposits the two tokens, while the variable side is the fee buyer who pays a premium and collects trading fees for a fixed term. Only the seller owns the underlying tokens and bears price risk. A worked example for a 10,000 USDC position with a 300 USDC premium and a 12.5 percent protocol share shows buyers need about 343 USDC in gross fees just to break even over 30 days. Sellers receive a 3 percent upfront return, but a 28 percent decline in the volatile token could still leave a full-range provider roughly 12 percent below the starting value after collecting the premium.
Montra operates on Elysium, a Kinetiq chain that settles to HyperEVM and uses HYPE for gas. Its Uniswap v4 pools include a seed position that cannot be removed, and LPs earn no fees until the token price has spent 10 minutes past the LP line. Montra labels its LP fee terms experimental. With about $232,720 locked in Saffron Vaults across nine chains and no published realized returns for Montra vaults, the early settlement records will show whether fee buyers are paying too much or sellers are giving away too much fee income.
