Aave, Pendle prepare for $67.4 million token rollover

About 67.4 million PT-AUSD-8OCT2026 tokens supplied as collateral on Aave V3’s Monad market will mature Oct. 8, according to risk adviser LlamaRisk. Each token becomes redeemable for one AUSD at maturity, ending its fixed-yield period.

TokenLogic has proposed listing Pendle’s PT-AUSD-17DEC2026 on Aave’s Monad market. The listing would give borrowers a later-dated principal token that could replace the October token and allow them to keep collateral in lending positions.

Borrowers can redeem the October tokens for AUSD, repay their loans or provide other collateral. Replacing them with December tokens would allow some borrowers to maintain their debt positions if the new collateral is accepted and sufficiently valued.

Demand for AUSD credit on Monad has also increased. TokenLogic reported that active AUSD loans on Aave rose 113% to $8.7 million from $4.1 million in the 15 days through Oct. 3. User deposits more than doubled to $11.2 million during the same period.

Aave initially launched the October collateral market with a 20 million-token supply cap. Users reached the cap by late August, after which LlamaRisk recommended increasing it to 40 million. That limit was reached within days, and the cap was later raised to 80 million. By Oct. 2, users had supplied 67.4 million October tokens.

TokenLogic proposed an initial cap of 20 million tokens for the December market. LlamaRisk recommended a 30 million-token starting cap and estimated that as many as 67.4 million tokens from the October market could eventually move into the new market if demand and liquidity support the transition.

The October collateral has been used by borrowers. In an Aug. 31 assessment, LlamaRisk found that the 18 largest suppliers all had outstanding debt, mainly in USDC, with additional borrowing in GHO, USDe and USDT0. Their median health factor was 1.02, leaving limited room for a decline in collateral coverage before liquidation risk increased.

Maturity does not automatically liquidate an Aave position. Borrowers must continue to meet collateral requirements after redeeming the principal token for AUSD. They can repay debt, add other collateral or replace the October token with the December version.

The December market is smaller than the expiring market. On Oct. 2, its Pendle pool had $1.61 million in liquidity, 904,717 PT outstanding and about $44,000 in trading volume since launch, according to LlamaRisk. Pendle users can create more principal tokens by splitting yield-bearing AUSD positions, so current pool liquidity does not set a fixed limit on future supply. Large transactions could affect prices and the fixed yield available to buyers.

LlamaRisk calculated the December token’s implied yield at 5.64% on Oct. 2. A temporary one-percentage-point incentive raised the effective rate to 6.64%. Aave borrowing rates were 4.28% for mUSD, 4.64% for GHO, 5.10% for USDT0 and 6.09% for USDC. The December token’s yield was below the 6.82% borrowing rate for USDe.

“Fixed yield becomes collateral. Collateral creates credit. Then the next maturity keeps the cycle moving,” DeFi researcher Andree wrote.

Aave borrowing rates change with market utilization, while Pendle yields change with buying and selling activity. The incentive for the December token is temporary, so the spread between potential yield and borrowing costs may change before the October tokens mature.