LlamaRisk Proposes Gradual Phase-Out of Approximately $1.33 Billion Worth of Collateral from Aave V3 Core

TechFlow reported on November 11, citing The Defiant, that Aave risk service provider LlamaRisk submitted a governance proposal recommending that Aave V3 Core be repositioned as a highly liquid blue-chip collateral market and that approximately $1.33 billion worth of collateral be gradually phased out (as of November 9, these collateral assets support approximately $1.03 billion in debt).

The proposal primarily involves rsETH, osETH, LBTC, tBTC, and rETH, as well as certain assets with smaller exposure. Initial measures include freezing the relevant reserves and setting LTV to 0, halting new supplies and borrowings using these assets as collateral, while existing positions remain unaffected. LlamaRisk plans to coordinate with asset issuers and large borrowers to arrange an orderly migration; if migration progress is insufficient, it will consider further measures such as gradually lowering liquidation thresholds.

The proposal aims to shift more complex assets, such as restaked assets and leveraged wrapped strategies, to Aave V4, where they can be priced more granularly through parameters such as risk premiums. The proposal is currently in the discussion stage and requires governance approval before implementation.

Source: TechFlow