LlamaRisk has recommended raising the USDT supply cap on Aave V3 Core from $2.9B to $3.48B after utilization hit 97%, with nearly all top depositors holding unlevered spot positions. A smaller increase is also proposed for syrupUSDT, doubling its cap to $13.6M. The governance action reflects sustained institutional demand for on-chain stablecoin yield and signals that DeFi lending rates remain attractive relative to off-chain alternatives.
For Armada's crypto repo desk, Aave V3 utilization at 97% implies elevated stablecoin borrow rates on-chain, which sets a competitive floor for crypto-collateralized repo pricing. If the cap increase passes and utilization normalizes, on-chain rates may compress, affecting the relative attractiveness of Armada's terms to hedge fund and market maker counterparties seeking USDT liquidity against BTC or ETH collateral.