Jack Paul 
Yield gap remains
Aave’s proposed $USDG rollover would let borrowers move stablecoin debt into a new fixed-yield $USDG position. But the replacement collateral yields less than three quoted borrowing rates. That gap matters because a rollover can keep a debt position open while resetting collateral yield at the new purchase price.
The plan involves Pendle principal tokens on X Layer. Holders of the token maturing Oct. 29 would move into a replacement maturing Feb. 25, 2027. In an Oct. 8 assessment, LlamaRisk said the February token’s on-chain yield alone fell short of USDT0, $USDC and $USDG borrowing costs. $GHO was the cheaper exception.
Numbers still show negative carry
An Oct. 10 refresh kept the gap. Pendle’s market API put the February PT implied annual percentage yield at about 2.98%. Aave’s X Layer market display showed variable borrowing APYs of 4.12% for USDT0, 5.87% for $USDC and 3.75% for $USDG. So the quoted PT return is below all three.
A Pendle PT is a discounted claim on an accounting asset at maturity. For this $USDG market, LlamaRisk describes redemption as one PT for one $USDG. The purchase discount sets the return if held to maturity. Ordinary PT holders give up the underlying variable yield and points to the corresponding yield token.
Borrowing to buy more PT increases exposure to that discount. The strategy earns positive carry only when the acquired PT return exceeds financing cost. When borrowing costs exceed the asset’s return, each additional borrowed increment cuts the position’s return before rewards and costs. LlamaRisk’s August review described positive carry, using a 3.19% PT yield against lower borrowing rates. The October snapshot shows the reverse for the February replacement.
Rewards and borrowing routes
There is also a difference between a quoted funding comparison and an allowed borrowing route. LlamaRisk’s recommended new Aave borrowing category, E-Mode 9, lists USDT0, $GHO and $USDC as borrowable assets. $USDG is absent from that proposed list, so its rate is a cost comparison, not proof of eligibility for the February setup.
LlamaRisk ties participating loop users’ profitability to external OKX Exchange Earn incentives. It also says an end to those incentives would likely push users to unwind. The public OKX Wallet bonus covers a separate program. It names $USDG Loop or PT-$USDG-29OCT2026 supplied to Aave through a designated Wallet campaign page, with bonus APY capped at 2%. Transactions through Aave or other third-party sites do not qualify.
The Wallet campaign ends Oct. 28 at 07:00 UTC. Distribution depends on eligible participants’ deposit shares, and the payout may be below the announced 490,000 $USDT pool.
Migration limits
LlamaRisk’s Oct. 8 recommendation also differs from the initial plan. It calls for new E-Mode 9 with a 91.48% loan-to-value limit, a 93.48% liquidation threshold and a 35 million PT supply cap. A position carried into the replacement setup would need to fit those limits if implemented. The February pool had about $1.42 million of reported liquidity, so migration size depends on quotes and acceptable slippage.