Aave Proposes to Limit the Use of Crypto Assets to $1.33 Billion

The LlamaRisk team, advising the Aave lending protocol on risk matters, has proposed limiting the use of several crypto assets in the main Aave V3 Core market on Ethereum. As of November 9, 2026, the initiative affected collateral worth $1.33 billion, securing about $1.03 billion in debt positions. The proposal was published on November 10 and has not yet been approved by the community.

Which assets may be subject to restrictions

The largest positions are in rsETH, osETH, LBTC, tBTC, and rETH. Only rsETH and osETH secure about $862 million in wrapped ether (WETH) debt. According to LlamaRisk, some of these positions use leverage of 12–14 times, which increases risks when the value of the collateral changes.

The authors propose freezing the respective reserves, stopping the acceptance of new deposits, and setting the loan-to-value (LTV) ratio at 0%. Meanwhile, rsETH and tBTC are already frozen, and existing loans will not be forcibly closed immediately after the initiative is adopted.

What will change for Aave borrowers

Holders of open positions will be able to repay debts, withdraw available collateral, or transfer positions to other assets and markets. LlamaRisk proposes gradually transferring more complex strategies to Aave V4, where the risks of different types of collateral can be considered separately.

If the debt volume does not decrease, the team allows for a phased reduction of liquidation thresholds for individual tokens. Raising the interest rate on WETH loans is considered only as a last resort.

Project representatives opposed the general decision

StakeWise founder Dmitry Tsuma proposed separately considering restrictions for osETH. Rocket Pool representative Darren Langley requested the removal of rETH from the initiative, pointing out the unique collateral features of this token.

The proposal is at the ARFC discussion stage. Further Aave governance decisions and a corresponding vote will be required to implement the restrictions. Until they are adopted, the new measures do not apply.