Why Aave froze the reserve
Aave moved to limit its exposure to tBTC after Threshold paused minting and Bitcoin redemption requests. The guardian multisig froze the tBTC reserve on Aave V3 Ethereum Core on Oct. 31. The transaction executed at 6:01 a.m. ET. LlamaRisk, Aave’s risk service provider, said it prepared the freeze to stop tBTC exposure from growing during the pause. The change sets the reserve’s maximum loan-to-value ratio to zero. Its liquidation threshold stays at 78%.
At the time, Aave’s interface showed about 1,770 tBTC supplied, worth roughly $136.5 million. tBTC is a bridge product that brings Bitcoin into DeFi. Deposited BTC is secured by groups of network operators.
What it means for borrowers
For existing borrowers, the freeze does not change position health factors or trigger liquidations, according to LlamaRisk. Repayments, withdrawals and liquidations can continue. Borrowing against other collateral remains available. Users who want to improve their health factors can repay debt or add other collateral. They cannot deposit more tBTC while the freeze lasts.
The action applies only to tBTC on Ethereum Core. It does not affect other reserves or the wider market. Aave’s tBTC reserves on Base and Arbitrum were already frozen in earlier deprecation rounds, LlamaRisk said.
Threshold limits new activity
Threshold’s Oct. 30 notice said it paused new BTC deposits, tBTC minting and new Bitcoin redemption requests through its app. The team called the step a precaution while security maintenance is completed.
Pending redemptions may still be paid on Bitcoin, but final settlement on Ethereum is paused. Some transactions may be delayed. Holding, transferring and using tBTC remain unaffected by Threshold’s pause, the notice said.
Threshold warned users not to send BTC to previously generated deposit addresses. It also asked them not to try new minting or redemption operations through alternative interfaces. Users who already deposited BTC should keep deposit receipts and transaction hashes instead of repeating transactions to clear a pending status.
What comes next
LlamaRisk said it will monitor tBTC positions and secondary-market liquidity. It plans to propose restorative measures once it is satisfied that tBTC operations are back to normal. For now, the freeze is a guardrail, not a liquidation event, though the pause adds another layer of uncertainty for tBTC users on Ethereum.
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