LlamaRisk Proposes $1.33B Collateral Exit From Aave Core

LlamaRisk proposed removing roughly $1.33 billion in collateral from Aave’s core market, affecting reserves that would first be frozen while existing loans stay open so borrowers can swap collateral or migrate to Aave V4. The plan targets the protocol’s core lending venue, where the affected assets underpin a material share of deposits and borrowing capacity. Freezing reserves rather than liquidating positions is meant to limit disruption, but it would reduce available collateral and could shift liquidity toward V4. The proposal matters because Aave is among the largest DeFi lenders, and a $1.33 billion collateral exit would reshape risk parameters and utilization across its core market. What to watch next is whether governance approves the freeze, how quickly borrowers rotate into V4, and whether the migration pressures rates or liquidity in the affected reserves.