A stablecoin with zero supply gets a lending cap

LlamaRisk, a risk provider to the Aave DAO, has published its assessment for listing Tether America USD, or USAT, on the Core Hub of Aave V4 on Avalanche. It supports adding USAT to the Main Spoke as a borrow-only reserve priced at a hard-coded one dollar. USAT on Avalanche is a bridged representation of the dollar stablecoin that Anchorage Digital Bank, a national trust bank, issues on Ethereum, so its value, redemption and credit exposure rest with Anchorage on Ethereum.

The unusual starting point is that the Avalanche token currently has zero supply and no trading venue. The proposed caps are 60 million USAT to add and 55 million to draw, provided 5 million dollars of exchange liquidity is first seeded on Avalanche.

The assessment is plain about the risks. The owner can mint directly on Avalanche with no cap or rate limit, alongside a LayerZero bridge route that is not yet live and fails three of four bridge standards. There is no client mint or redemption on Avalanche. Every privileged role sits with one three-of-five multisig with no timelock, and the same three keys control the token, upgrades and bridge configuration on all three chains, including the power to blocklist the Hub and burn its USAT balance. The published bug-bounty scope names no Avalanche contract, and the route from Ethereum has no rate limit; Anchorage is asked to add one within a month of onboarding.

Why list it at all is answered by the design. As a borrow-only reserve with a zero collateral factor and a fixed price, a depeg moves no health factor. The binding stress is the opposite case, a market price above par, when borrowers must find USAT to repay and new supply can come only from the owner's mint or the bridge. The token and bridge code carry 2026 audits by Guardian and OpenZeppelin, and messages arriving on Avalanche need three required verifiers. Caps will be reassessed when client mint and redemption go live on Avalanche or a bridge rate limit is verified on chain, and using USAT as collateral would need a Chainlink USAT/USD feed there.