LlamaRisk and Aave Risk Stewards have proposed doubling the wstETH borrow cap on Aave V3 Core from 14,000 to 28,000, driven by near-full utilization at 99.8% with 13,977 wstETH currently borrowed. The median health factor of top borrowers is 1.11, with most below 1.16, indicating concentrated liquidation risk at current collateral levels. Separately, USDe borrow cap on Aave V3 Core would be cut from 700 million to 100 million, while USDe supply cap on Plasma rises to 750 million.
For Armada's crypto repo desk, the wstETH data point is a direct market signal. Near-100% borrow cap utilization with thin health factor buffers among the largest positions signals elevated liquidation risk in ETH-collateralized onchain borrowing, which functions as a real-time benchmark for how the market is pricing and stressing ETH-denominated collateral. Armada should use this data to cross-check its own wstETH or ETH haircut assumptions and ensure its bilateral repo LTV terms reflect current onchain stress conditions.