Aave Risk Stewards Propose Cap Cuts After Binance Hack Freeze

Aave's risk service provider LlamaRisk has proposed cutting borrow caps on Aave V3 and draw caps on Aave V4 credit lines, following the freeze of reserves across both versions of the protocol after the October 29, 2026 Binance hot-wallet incident, per a governance forum post dated October 30. The post states the recommended caps would sit at roughly 2% above the amount already borrowed just before the exploit, for reserves and credit lines with more than $10 million borrowed and more than $10 million of remaining capacity.

Why Aave froze reserves in the first place

According to a separate Aave governance thread published October 29, a Binance hot wallet on Ethereum sent about 167,464 ETH and 63 tokens to a single address at 20:24 UTC that day, with a second Binance hot wallet sending a further 28,006 ETH to the same address minutes later. Between 20:58 and 21:01 UTC, a wallet in the exploiter's cluster supplied $60 million in USDT to Aave V3 Ethereum Core and borrowed 19,762 WETH, worth roughly $44.6 million at the time, the thread states. That activity, which occurred roughly 40 minutes before Aave's first freeze action at 21:42 UTC, prompted Aave's guardian multisig to freeze lending markets DAO-wide as a precaution. The governance post notes that no exploiter wallet has interacted with Aave since 21:01 UTC.

The thread states the freeze covered 175 reserves on Aave V3 across 16 networks and 117 reserves on Aave V4 across four networks — a combined total of 292 reserves across both versions, by CoinsCipher's count of the two figures stated in the post. A freeze blocks new supply and borrow positions on affected reserves but does not stop existing users from repaying loans or withdrawing collateral; because frozen reserves accept no new supply, repaying is described in the thread as the only way for a borrower to raise their health factor while the freeze is active. The DeFi protocol's own disclosure does not name a dollar figure for assets at risk across the broader Binance incident; that scope sits outside what either Aave governance thread states.

What the proposed cap cuts change next

The October 30 LlamaRisk proposal targets specific reserves for tightening once frozen markets reopen to new activity. Listed changes include lowering the WETH borrow cap on Aave V3 Core from 2,400,000 to 1,790,000, among other reductions across large V3 borrow reserves and V4 spoke credit lines. The rationale, as stated in the forum post, is to cap the headroom available for new borrowing to roughly 2% above pre-exploit levels on the markets with the most capacity remaining — a targeted tightening rather than a blanket market-wide restriction.

The Aave posts do not state a specific date for when frozen reserves will fully reopen; the governance thread frames the cap reductions as a step tied to markets regaining normal activity rather than an announcement of reopening itself. Readers tracking crypto exchange security incidents and their knock-on effects for lending markets can monitor Aave's governance forum directly for further risk-steward actions, which the protocol has used as its primary channel for both the freeze and the proposed cap changes.