LlamaRisk Proposes LlamaGuard Caps Borrow-Cap Rate Limiter for Aave V3
Key Takeaways
- •LlamaRisk, a risk-management service provider active in Aave governance, has submitted an ARFC proposing LlamaGuard Caps, an automated borrow cap rate limiter for Aave V3.
- •The proposed mechanism would limit the speed at which available liquidity in an individual Aave V3 reserve can be depleted, introducing a time-based dimension to the protocol's risk framework.
- •Existing borrow caps restrict only the total borrowable amount from a reserve and take effect through governance action, whereas LlamaGuard Caps would operate as an automated layer alongside those manually adjusted limits.
- •Aave V3 is a decentralized lending protocol operating across multiple blockchain networks, where users supply assets to earn yield and borrow against collateral.
- •As an ARFC, the proposal must first go through community discussion, and its fate will be determined by a subsequent vote of AAVE token holders.
LlamaRisk has submitted an Aave Request for Comments (ARFC) to Aave governance introducing "LlamaGuard Caps," an automated borrow cap rate limiter for Aave V3 that dynamically constrains how fast liquidity can leave any single reserve.
The proposal describes an automated mechanism that imposes a rate limit on how quickly available liquidity in an individual Aave V3 reserve can be drawn down, complementing the protocol's existing borrow cap parameters. Existing borrow caps restrict only the total amount that can be borrowed from a reserve; the proposed limiter adds a time-based dimension to that framework, targeting the pace at which a reserve's available liquidity can be depleted rather than its overall ceiling.
Aave V3 is the current major version of Aave, a decentralized lending protocol on which users can supply assets to earn yield and borrow against collateral across multiple blockchain networks. Borrow caps are among the risk parameters configured on its markets, limiting the total amount of a given asset that can be borrowed from a single reserve. These limits are typically proposed and adjusted through governance, with risk service providers playing a central role in maintaining them as market conditions change; under that arrangement, cap changes take effect through governance action, whereas LlamaGuard Caps would introduce an automated layer operating alongside them.
In Aave's governance framework, an ARFC is a stage through which service providers and community members present proposed changes for open discussion and a vote by AAVE token holders. LlamaRisk is a risk-management service provider active in Aave governance. As an ARFC, LlamaGuard Caps now enters that process in practice: the next step is community discussion of the proposal, with any decision on the mechanism resting on a subsequent vote by AAVE token holders.
DefiLiban reported on the proposal on November 11, 2026, in an article written by Oliver Benjamin, a DeFi research writer at DefiLiban who covers decentralized finance systems, token economics, liquidity design, and blockchain market structure (source article).
