Key Facts

  • Risk manager LlamaRisk proposed freezing rsETH, osETH, LBTC, tBTC, rETH and a group of smaller reserves on Aave V3 Core.

  • The assets in scope held $1.33 billion of collateral backing $1.03 billion of debt as of Nov. 9, according to the proposal.

  • A freeze would stop new supply and set loan-to-value to zero, while existing positions would stay open and could unwind over time.

Risk manager LlamaRisk proposed freezing rsETH, osETH, LBTC, tBTC, rETH and a group of smaller reserves on Aave V3 Core.

The assets in scope held $1.33 billion of collateral backing $1.03 billion of debt as of Nov. 9, according to the proposal.

A freeze would stop new supply and set loan-to-value to zero, while existing positions would stay open and could unwind over time.

The proposal covers rsETH, osETH, LBTC, tBTC and rETH, together with a group of lower-exposure reserves. As of Nov. 9, those assets held $1.33 billion of collateral backing $1.03 billion of debt, LlamaRisk said.

What a Freeze Would Do

LlamaRisk said it would then work with each asset issuer and the largest borrowers on an orderly migration. If passed, the proposal would also approve follow-up controls, including stepwise cuts to liquidation thresholds and, as a final step, interest rate changes with targeted rebates, to be used only where positions do not migrate within the coming months.

Why LlamaRisk Wants to Narrow Core

Pushback on the Forum

Two replies on the forum objected. A StakeWise representative said its liquid staking has run since January 2021 "with zero hacks and zero validator slashings," and that osETH has been collateral on Aave for 2.5 years.

Another reply, arguing for Rocket Pool's rETH, said it supports focusing Core on established, liquid collateral but asked that the token be removed from the proposal, calling it "a plain LST backed by staked ETH and fully verifiable on-chain."

The proposal is at the Aave Request for Final Comment stage and has not gone to a vote.