LlamaRisk's review of Aave V3 on MegaETH found stcUSD supply caps at 100% utilization, with the top three addresses representing the majority of supply and carrying health factors ranging from 1.01 to 2.12 with a median of 1.06. The proposed cap increase from 40 million to 60 million units accommodates demand but does not address the underlying concentration risk. Outstanding debt consists primarily of USDm borrowed against stcUSD collateral.
For Armada's crypto repo desk, the stcUSD data point is a stress-test reference. Health factors this close to liquidation thresholds on a concentrated book mirror the risk profile Armada must manage when accepting yield-bearing stablecoins as repo collateral. A forced liquidation of the top three Aave positions could move stcUSD prices in ways that stress Armada's own haircut buffers if stcUSD is ever considered for the collateral schedule. Monitoring DeFi protocol health distributions provides real-time benchmarks for LTV calibration.