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LlamaRisk proposes freezing osETH, LBTC, and rETH on Aave V3 Core

Risk adviser LlamaRisk has proposed freezing StakeWise's osETH, Lombard's LBTC, Rocket Pool's rETH, and six smaller reserves on Aave V3 Core to shift higher-risk collateral toward Aave V4. The three largest proposed freezes span $538.6 million in collateral backing $364.1 million of debt, prompting a request from StakeWise for a separate vote.

Risk adviser LlamaRisk, which receives partial funding from the Aave DAO, submitted a proposal on Nov. 10 to freeze StakeWise's osETH, Lombard's LBTC, Rocket Pool's rETH, and six smaller reserves on the Aave V3 Core Ethereum lending market, Unchained reported. The adviser explained that the objective is to reserve Aave V3 Core for liquid, established collateral while shifting riskier collateral assets to Aave V4. The proposal listed five primary assets, but Kelp DAO's rsETH and Threshold Network's tBTC were already frozen on Core earlier in the year.[3]

The three largest new freezes encompass $538.6 million in collateral supporting $364.1 million in debt, based on LlamaRisk's Nov. 9 figures. Most of that new exposure is tied to osETH, which accounts for $279.4 million in collateral backing $256.6 million in wrapped ether loans leveraged at roughly 14 times. Across all reserves in scope, LlamaRisk identified $1.33 billion in collateral backing $1.03 billion in total debt, which currently generates around $3.7 million in annual DAO revenue.[3]

Freezing an asset sets its loan-to-value ratio to zero and blocks new deposits and borrowing, though existing positions remain unaffected. The proposal also outlines lifting the reserve factor to 99% across seven borrowable frozen reserves carrying over $20,000 in debt without altering borrow rates. If exposures do not contract over time, LlamaRisk envisioned stepwise reductions to liquidation thresholds and, as an eventual step, higher wrapped ether borrow rates targeting leveraged looping positions.[3]

On Nov. 11, a poster identifying as the founder of StakeWise called for the osETH freeze to be broken out into an independent governance vote. The measure remains an Aave Request for Final Comments in forum discussion, and no Snapshot vote had been scheduled as of Nov. 11.[2][3]

Key facts

  • On Nov. 10, Aave DAO-funded risk adviser LlamaRisk proposed freezing osETH, LBTC, rETH, and six small reserves on Aave V3 Core.
  • The proposed freezes aim to keep Aave V3 Core focused on established, liquid collateral and shift riskier tokens to Aave V4.
  • The three largest new freezes cover $538.6 million in collateral backing $364.1 million in debt, led by $279.4 million of osETH collateral supporting $256.6 million in WETH debt.
  • Across all assets in scope, LlamaRisk calculated $1.33 billion in collateral backing $1.03 billion in debt, which brings the DAO roughly $3.7 million per year.
  • The plan raises the reserve factor to 99% on seven frozen borrowable reserves with more than $20,000 in debt, while leaving existing user positions untouched.
  • StakeWise's founder asked on Nov. 11 for the proposed osETH freeze to be voted on separately.
  • The proposal was an Aave Request for Final Comments in forum discussion with no Snapshot vote scheduled as of Nov. 11.

Sources · 3 sources

  1. CR

    CryptoSlateArticle ·

    Aave will freeze $279M in osETH, unless StakeWise wins this vote Dmitri seeks a separate vote as Aave weighs who should bear osETH leverage risk and how existing borrowers can migrate. Read the full story on CryptoSlate Understand the crypto stories that matter and what to watch next. Get The Catalyst in your inbox

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  2. LS

    Laura Shin@laurashinPost on X ·

    LlamaRisk has proposed freezing osETH, LBTC and rETH on Aave V3 Core, and StakeWise's founder wants the osETH freeze put to its own vote. The proposal is still in discussion on Aave's governance forum, with no Snapshot vote posted as of Nov. 11. https://t.co/N7spucKW95

    Open source
  3. UN

    UnchainedArticle ·

    LlamaRisk Asks Aave to Freeze StakeWise, Lombard and Rocket Pool Tokens on Its V3 Core Market LlamaRisk , a risk adviser that gets part of its funding from the Aave DAO (decentralized autonomous organization), proposed on Nov. 10 that Aave freeze three tokens on Aave V3 Core , one of its Ethereum lending markets: StakeWise’s staked ether token osETH , Lombard’s yield-bearing bitcoin token LBTC and Rocket Pool’s liquid staking token rETH , along with six small reserves. The goal, LlamaRisk wrote, is to keep Core for established, liquid collateral and to move riskier assets to Aave V4. The proposal names five assets, but two are already frozen on Core: rsETH , Kelp DAO’s restaked ether token, since April, and tBTC , Threshold Network’s bitcoin token, since Oct. 31, after Threshold paused minting and redemptions. The three largest new freezes cover $538.6 million of collateral backing $364.1 million of debt, by Unchained’s sum of LlamaRisk’s Nov. 9 figures. Across everything in scope, LlamaRisk counted $1.33 billion of collateral backing $1.03 billion of debt. LlamaRisk put the DAO’s current revenue from the debt in scope at about $3.7 million a year. Get Unchained’s crypto news in your inbox with the free Unchained Daily newsletter . What a Freeze Does A freeze blocks new deposits and new borrowing against an asset and sets its loan-to-value (LTV) ratio, the share of a deposit’s value a user can borrow, to zero. Speaking about Aave’s Oct. 29 emergency freeze , LlamaRisk CEO Adam Sadowski said on Unchained’s Uneasy Money , in an episode recorded Nov. 4, that a freeze works as “a one-way valve where users can always exit, but no new exposure can come in.” The new proposal says existing positions stay “untouched and unaffected.” Most of the new exposure sits in osETH: $279.4 million of collateral backing $256.6 million of wrapped ether (WETH) loans, at about 14 times leverage. The plan raises the reserve factor , the cut of borrowers’ interest that goes to the DAO instead of to lenders, to 99% on seven borrowable frozen reserves that still carry more than $20,000 of debt. LlamaRisk said borrow rates would not change. If exposure does not shrink, the proposal approves stepwise cuts to liquidation thresholds, the collateral level at which a loan can be liquidated, and, only as a final step, a higher WETH borrow rate aimed at the rsETH and osETH leveraged loops, positions that borrow ether against staked ether over and over. “We will not make abrupt parameter changes that would liquidate significant positions,” LlamaRisk wrote in the proposal . StakeWise Asks for Its Own Vote On Nov. 11, a poster signing as StakeWise’s founder asked LlamaRisk and the DAO to “move the proposed osETH freeze to a separate vote.” The proposal is an Aave Request for Final Comments (ARFC), still in discussion on Aave’s governance forum. No vote on it had been posted to the Aave DAO’s space on Snapshot, the offchain voting platform, as of Nov. 11. Related Listen: How the $6B Binance Hack Ran Through Aave: Uneasy Money The post LlamaRisk Asks Aave to Freeze StakeWise, Lombard and Rocket Pool Tokens on Its V3 Core Market appeared first on Unchained .

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