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Aave’s management of Pendle Principal Tokens may become substantially more automated under a new LlamaRisk architecture built around the Chainlink Runtime Environment (CRE).
The proposal would replace the manual process currently used to update risk parameters for Pendle PT collateral with three automated workflows. However, the upgrade is not live yet. The Aave Governance proposal remains at the ARFC stage and must still progress through Snapshot and an Aave Improvement Proposal before implementation.
The change addresses an operational gap created after Chaos Labs stepped down as an Aave risk provider earlier this year. Its existing Principal Token (PT) risk-oracle infrastructure was subsequently shut down, leaving LlamaRisk to monitor affected markets and submit parameter changes manually through Aave’s Risk Steward framework.
Today, @LlamaRisk is introducing LlamaGuard PT, an automated risk oracle for Pendle PT collateral on Aave, built on @chainlink CRE.
It computes the parameters risk stewards set by hand today, with step size caps, deviation gates, and minimum delays enforced onchain. https://t.co/K9sek82CsD
— Aave (@aave) August 12, 2026
The proposed design divides the work between three independent CRE workflows.
One calculates an exponential moving average (EMA) of Pendle’s implied interest rate. A second uses that smoothed rate to determine the discount applied when Aave values a PT as collateral. The third calculates three lending parameters for each supported market: the liquidation threshold, loan-to-value ratio, and liquidation bonus.
That is particularly relevant for Pendle PTs because their risk profile changes as they approach maturity. A PT represents a claim redeemable at a fixed maturity date and generally moves toward its redemption value as expiry approaches. LlamaRisk argues that using static lending parameters can therefore be unnecessarily restrictive near maturity while providing insufficient protection earlier in a token’s life.
The automation is designed to adjust those controls as market conditions and time to maturity change instead of waiting for a risk manager to manually intervene.
Pendle collateral has already become economically significant for Aave.
LlamaRisk reported last year that Pendle PT deposits on Aave’s core market surpassed $1.6 billion within one month of integration. Its analysis also identified a structural risk: Liquidity for individual PTs is concentrated largely in their corresponding Pendle pools, potentially limiting how much collateral liquidators can unload during stressed markets.
In one modeled scenario, LlamaRisk estimated that a $0.12 PT price decline could create up to $7 million in bad debt, while a more extreme $0.21 decline could raise potential losses to around $70 million.
The CRE architecture is intended to react to those changing conditions more systematically.
Crucially, Chainlink CRE would not receive unrestricted control over Aave. Signed reports would pass through a governance-owned router and Aave’s existing AgentHub, which rechecks delays, ranges, and other safeguards before parameter changes can reach the protocol. Aave Governance would continue owning the contracts, while LlamaRisk would have limited rights to update methodology settings.
If approved, Pendle PTs would effectively become the first test of a broader automated risk stack. LlamaRisk said the same architecture may eventually support supply and borrow caps, correlated asset price oracle controls, interest rate parameters, and automated market freezes, turning the proposal into more than a Pendle-specific upgrade.
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