A risk service provider has pushed Aave governance to let Bitcoin-backed borrowers take out materially larger loans while leaving less room before liquidation.
LlamaRisk's proposal would lift the maximum loan-to-value ratio for WBTC and cbBTC on Ethereum Core from 73% to 81%, meaning $100 of collateral could support up to $81 of debt instead of $73. The liquidation threshold would also rise, from 78% to 85%.
Together, the two changes narrow the price cushion between maximum borrowing and liquidation from about 6.4% to about 4.7%. That means a Bitcoin dip of 4.7% could push a maximally levered position into liquidation, where before it took 6.4%.
| Ethereum Core BTC parameter | Current | Proposed |
|---|---|---|
| --- | --- | --- |
| Maximum LTV | 73% | 81% |
| Liquidation threshold | 78% | 85% |
| Collateral-price cushion to liquidation | About 6.4% | About 4.7% |
The math is straightforward but the consequences are not. Loan-to-value sets how much debt collateral can carry, and the liquidation threshold marks where a position becomes eligible for seizure. When both move up, the borrowing limit sits closer to the liquidation line, so less price movement is needed to trigger it.
These changes reach beyond Ethereum Core. The proposal would raise Arbitrum WBTC's ordinary LTV by five percentage points and Base cbBTC's by eight points. Ethereum Core WETH, wstETH, and weETH would each get a 0.5-point LTV bump.
On Base, cbBTC's stablecoin E-Mode would move to 82% LTV with an 85% liquidation threshold, and the liquidation bonus would fall from 7.5% to 6%. LlamaRisk studied liquidation behavior from August 2025 through August 2026 across Ethereum Core, Arbitrum, and Base.
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. That five-minute figure measures a work-off window, not a guarantee.
Large positions can require several calls because a single liquidation generally repays only part of the debt. The study also measured processing after price-feed publications during the February and October 2025 stress windows, finding that 100% of seized volume cleared within five minutes of the feed publication that made liquidation profitable.
But the record has limits. February produced no recognized deficit. October produced $0.39 million of event-level bad debt against roughly $128 million.
Those numbers were recorded under existing parameters, and the proposed settings have never been tested in a live stress event. A year of clean liquidations does not establish how 81% LTV would perform when markets are disrupted and positions pile up faster than liquidations can clear. The proposal advanced to Snapshot on Sept.
21, with voting expected to begin within 24 hours. A positive vote would still require an implementation AIP before any of these limits take effect. Until then, the 73% LTV and 78% liquidation threshold remain the live settings on Ethereum Core, and the 4.7% cushion stays hypothetical.
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