Oracle · Bitcoin · Aave · Ethereum · CryptoSlate
Narrowing price cushions leave Bitcoin loans vulnerable to 4.7% price dips as Aave weighs higher leverage
Compiled by KHAO Editorial — aggregated from 1 source. See llms.txt for citation guidance.
◌ Single Source
Aave governance has advanced a proposal that would give Bitcoin-backed borrowers materially more leverage while leaving less room before liquidation.
Key facts
- On Ethereum Core, the analysis counted 7,206 ETH liquidations that seized $618 million and 2,621 BTC liquidations that seized $358 million
- 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
- 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
- October produced $0.39 million of event-level bad debt against roughly $128 million, although LlamaRisk said none affected the ETH- or BTC-family collateral analyzed for this proposal
Summary
01 A positive Snapshot vote would still need to be followed by an implementation AIP. 02 At maximum borrowing, the simplified price cushion before liquidation would shrink from 6.4% to 4.7%. 03 Fast historical liquidations support the proposal, but cannot rule out losses during disrupted markets. 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.