LlamaRisk, acting as Aave V3 Risk Stewards, proposed supply cap changes on May 21, 2026, recommending significant reductions for wrapped and restaked BTC assets: LBTC cut from 3,000 to 2,240, eBTC from 400 to 134, and ezETH from 20,000 to 6,690. These cuts reflect deteriorating on-chain liquidity and position health in those reserves. Simultaneously, caps for USDe, sUSDe, and cbETH are being raised, reflecting healthier utilization in those markets.
For Armada's crypto repo desk, the LBTC, eBTC, and ezETH reductions are a direct risk signal. These assets represent the wrapped and restaked collateral category that carries additional smart contract and liquidity risk relative to native BTC or ETH. If Aave's risk framework is reducing exposure, Armada's internal LTV benchmarks for these instruments should be reviewed for consistency. The USDe cap expansion is also notable as a data point on stablecoin collateral appetite in DeFi, relevant to how Armada prices yield-bearing stablecoin positions.