LlamaRisk's May 25 Risk Stewards update reports USDtb borrow cap on Aave V3 Core has reached 100% utilization at roughly $140 million, prompting a recommended increase to $182 million. The top borrowers show health factors between 1.01 and 2.64 with a median of 1.46, a notably thin buffer. Collateral is dominated by BTC variants including WBTC, tBTC, cbBTC, and LBTC, mirroring the collateral mix relevant to Armada's crypto repo book.
For Armada's crypto repo desk, this data point is a live stress indicator. A median health factor of 1.46 across large BTC-collateralized borrowers means a moderate BTC price drawdown could trigger cascading liquidations on Aave, which would pressure BTC spot prices and collateral valuations simultaneously. Armada should use this utilization data to calibrate BTC haircuts and stress scenarios in its own LTV framework.