Aave Freezes tBTC After Its Bitcoin Exit Door Locks

At 10:01 UTC on October 31, Aave's guardian multisig froze new tBTC supply and borrowing on Aave V3 Ethereum Core, setting tBTC's borrowing loan-to-value ratio to zero while leaving its 78% liquidation threshold unchanged. The action followed Threshold's pause on redemptions of tBTC into native Bitcoin, a step that separates moving tBTC on Ethereum from releasing BTC on the Bitcoin network. Risk provider LlamaRisk outlined the restrictions in a governance update, noting withdrawals remain subject to pool liquidity and collateral rules and return tBTC rather than Bitcoin. LlamaRisk said it will monitor Threshold's updates, Aave positions and tBTC liquidity before proposing to restore the settings.