LlamaRisk confirmed the execution of initial emergency batches, though actual access remains governed by collateral framework rules and available liquidity.
Borrowing room was preserved through emergency cap cuts at Aave to return to pre-Binance hot-wallet levels, even though LlamaRisk estimates the move wipes out nearly $3.8 billion in unused capacity.
In an Oct. 30 update, risk service provider LlamaRisk confirmed the execution of lower borrowing ceilings and temporary interest-rate changes on Aave V3 and V4, while GHO borrow-cap cuts on the Core and Prime markets were kept queued.
These steps were taken following an Oct. 29 emergency freeze, after LlamaRisk’s initial assessment described the exploiter’s Aave position as overcollateralized and subject to normal liquidation.
How Much Borrowing Capacity Is Still Available?
Aave V4’s draw ceilings govern individual credit lines through which a lending market, known as a spoke, pulls assets from a shared hub, ensuring new borrowing cannot be enabled while a reserve remains frozen.
LlamaRisk’s ceiling model calculates initial values using the higher of pre-exploit borrowing or current observed figures, adding roughly 2% alongside asset-specific rounded limits, with focus directed toward larger borrowing paths exceeding $10 million in both pre-incident debt and remaining capacity.
This strategy can drastically shrink a former limit while keeping it above previous debt levels.
Debt repayments can free up extra space beneath the existing ceiling, leaving Core USDC’s listed cap roughly 248.4 million USDC above debt as of Oct. 30 since borrowing was reduced below its pre-exploit level.
Core WETH’s published ceiling of 1.79 million WETH stood above active debt of 1,749,730 WETH, as active debt was selected by LlamaRisk as the sizing basis because it included the exploiter’s 19,762 WETH loan.
Separately, the queued GHO updates would trim Core’s limit from 150 million to 105 million GHO and Prime’s from 85 million to 35 million, resulting in a 95 million GHO overall reduction.
Cash Liquidity and the Cost of Borrowing
During the freeze, new deposits and borrowing were blocked while withdrawals, repayments, and liquidations remained functional, preventing users from adding extra collateral to frozen reserves.
Aave’s withdrawal policy restricts exits to unborrowed, available liquidity, requiring a lender whose deposits back an active loan to also maintain the overall health of the position.
At 00:26 UTC on Oct. 30, Core USDC utilization was reported by LlamaRisk at 97.8%, while several other reserves appeared at 100%.
Reopening supply lets cash flow back into the target asset pool, while repayments return borrowed funds to it, whereas available liquidity in that pool is consumed by borrowing and supplier withdrawals.
LlamaRisk also reported implementing temporary Slope2 reductions, a adjustment designed to flatten the steep section of Aave’s borrowing-rate curve above target utilization while leaving modeled rates at or under that threshold unaffected.
Fresh deposits cannot be drawn into a reserve by higher interest rates while supply remains blocked, though lower rate growth can ease strain on borrowers without clearing their principal or adding liquidity for withdrawals.
Even though a universal 10% borrowing ceiling was described by LlamaRisk as the primary objective, its modeled full-utilization chart lists 20% for Core DAI, 34% for Core USDtb, 25% for Monad mUSD, and 19% for Ethereum Core frxUSD, while Plasma GHO’s proposed second slope shows 5.25% in the summary versus 11.5% in the specification.
Because specific conflicting parameters were not identified by LlamaRisk in its follow-up execution update, borrowers cannot rely on the general 10% figure as a confirmed ceiling across every affected reserve.
Collateral Requirements Vary Between New and Existing Positions
Four waves are outlined in LlamaRisk’s rollback strategy, though only the V4 collateral-configuration phase was explicitly flagged as completed in the 13:49 UTC report.
Under the proposed strategy, fresh borrowing restricts USDT, USDC, USDT0, POL, WAVAX, sAVAX, XAUt, PAXG, and OP—along with their wrapped and bridged formats—to zero collateral leverage, a zero loan-to-value limit enforced on V3 in E-Mode that is mirrored by a zero collateral factor setting on V4.
Under the framework outlined by LlamaRisk, those same tokens can otherwise be deposited, withdrawn, borrowed, and repaid once active market restrictions are lifted, provided liquidity and standard account rules allow it.
Because liquidation thresholds remain untouched on V3, the LTV reduction alone does not alter current health factors, whereas taking out a new loan, withdrawing collateral, or toggling assets on V4 immediately shifts an active position onto the zero-factor rules.
Aave’s V3 Pool documentation introduces an additional exit constraint, requiring users to disable zero-LTV reserves as collateral or fully withdraw them before taking out other assets.
Maintaining previous aggregate borrowing thresholds preserves headroom below the caps, though active users still require proper market permissions and collateral settings, while lenders depend on sufficient unborrowed reserves to complete their exits.
Those conditions, combined with the rate actually implemented across each reserve, dictate what the reopening ultimately yields.
