LlamaRisk, acting as Aave risk stewards, has proposed substantial supply cap reductions across a wide range of Aave V3 Polygon reserves, including cutting WBTC from an undisclosed level to a lower cap, WETH from 32,000 to 15,000, stablecoin pools by 50% or more, and liquid staking tokens like wstETH and MaticX sharply lower. The breadth and magnitude of the cuts indicate systemic liquidity thinning on Polygon rather than isolated asset concerns.
Armada's crypto repo desk benchmarks collateral LTV limits against Aave's on-chain liquidity depth. Halving supply caps across WBTC, WETH, and major stablecoins on Polygon meaningfully reduces the liquidation buffer underpinning those benchmarks. If Armada's LTV ratios were calibrated assuming Aave's previous capacity, they may now be too generous relative to actual market depth, warranting a prompt recalibration.