{"id":13576,"date":"2026-09-22T17:28:56","date_gmt":"2026-09-22T17:28:56","guid":{"rendered":"https:\/\/cryptonews.uk.com\/?p=13576"},"modified":"2026-09-22T17:28:56","modified_gmt":"2026-09-22T17:28:56","slug":"bitcoin-ltv-could-rise-to-81-under-aave-proposal","status":"publish","type":"post","link":"https:\/\/cryptonews.uk.com\/?p=13576","title":{"rendered":"Bitcoin LTV could rise to 81% under Aave proposal"},"content":{"rendered":"

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Aave governance has advanced a proposal that would give Bitcoin-backed borrowers materially more leverage while leaving less room before liquidation.<\/p>\n

The proposal from risk service provider LlamaRisk would let users on Aave V3 Ethereum Core borrow as much as $0.81 against each $1 of WBTC or cbBTC collateral, up from $0.73. The liquidation threshold would rise from 78% to 85%.<\/p>\n

LlamaRisk said on Sept. 21 that the proposal had advanced to Snapshot and voting would begin in less than 24 hours. The vote result and any implementation remained unverified at the reporting cutoff, so the higher limits are proposed parameters rather than live settings.<\/p>\n

The case rests on one year of liquidation data showing that economically meaningful positions generally cleared within minutes. That history was recorded under existing parameters. It supports an argument for greater capital efficiency but cannot establish how the proposed settings would perform during the next extreme move.<\/p>\n

Eight more cents of Bitcoin borrowing power<\/h2>\n

Loan-to-value, or LTV, sets the maximum debt that collateral can support. At 73% LTV, $100 of WBTC or cbBTC can support up to $73 of debt before reserve caps, available liquidity, asset eligibility and account-level constraints. At 81%, the same collateral could support up to $81.<\/p>\n

The liquidation threshold marks the point where a position becomes eligible for liquidation. On Ethereum Core, the proposal would raise that threshold for WBTC and cbBTC from 78% to 85%.<\/p>\n\n\n\n\n\n\n\n
Ethereum Core BTC parameter<\/th>\nCurrent<\/th>\nProposed<\/th>\n<\/tr>\n<\/thead>\n
Maximum LTV<\/td>\n73%<\/td>\n81%<\/td>\n<\/tr>\n
Liquidation threshold<\/td>\n78%<\/td>\n85%<\/td>\n<\/tr>\n
Collateral-price decline from maximum LTV to liquidation<\/td>\nAbout 6.4%<\/td>\nAbout 4.7%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The raw distance between LTV and the liquidation threshold would fall from five percentage points to four. The last table row expresses that distance as a collateral-price decline relative to the threshold, assuming debt remains unchanged and Bitcoin is the moving leg. Raising both parameters still narrows the borrower\u2019s price cushion because the borrowing limit moves closer to the new liquidation line.<\/p>\n

\"Infographic\"Infographic<\/p>\n

The changes extend beyond Ethereum Core. The proposal would raise Arbitrum WBTC\u2019s ordinary LTV by five percentage points and Base cbBTC\u2019s by eight points. Ethereum Core WETH, wstETH and weETH would each receive a 0.5-point LTV increase. Selected liquidation thresholds would also rise, while Base cbBTC\u2019s liquidation bonus would fall from 7.5% to 6%. A separate Base cbBTC stablecoin E-Mode would move to 82% LTV and an 85% liquidation threshold.<\/p>\n

These figures describe maximum capacity per dollar of eligible collateral. They do not quantify how much debt users would add. The proposal does not disclose a complete current dataset of collateral-enabled balances, debt attributed to each affected asset and account health factors. Total reserve supply would overstate usable collateral because some supplied tokens may be ineligible, disabled as collateral or unconnected to debt. Historical seized volume likewise does not reveal the live distribution of positions.<\/p>\n

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Related Reading<\/span><\/p>\n

You can borrow against Bitcoin without selling it, but there\u2019s a catch<\/h3>\n<\/p>\n

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Minutes of liquidation history meet an hour-long tail model<\/h2>\n

LlamaRisk studied liquidation behavior from August 2025 through August 2026 across Ethereum Core, Arbitrum and Base.<\/p>\n

On Ethereum Core, the analysis counted 7,206 ETH liquidations that seized $618 million and 2,621 BTC liquidations that seized $358 million. For both collateral families, the value-weighted 99th-percentile time a liquidation call spent at or below its execution price was five minutes.<\/p>\n

That statistic measures a liquidation work-off window. It is different from saying that 99% of transactions executed within five minutes of an oracle update. Large positions can require several calls because a single liquidation generally repays only part of the debt.<\/p>\n