🟣 DeFi Day 90: Aave Supply & Borrow Caps Today, let's understand another important Aave safety mechanism: Supply Caps and Borrow Caps. 🛡️ 1. Supply Cap A supply cap limits how much of a particular asset can be supplied to an Aave market. Why? To limit protocol exposure if an asset has vulnerabilities or unexpected risks. 2. Borrow Cap A borrow cap limits how much of a particular asset can be borrowed. Why? To control borrowing exposure and help manage liquidity and market risks. Example Imagine an Aave market has: * Supply cap: 1,000 ETH * Borrow cap: 500 ETH Once the relevant cap is reached, additional supply or borrowing may be restricted according to the protocol's rules. These caps are configured per asset and market; they aren't universal values across Aave. The key insight: DeFi protocols don't just manage how users lend and borrow. They also set boundaries on how much risk the system can take.