LlamaRisk proposes gradually exiting approximately $1.33 billion in collateral from Aave V3 Core

LlamaRisk has proposed a governance change that would reposition Aave V3 Core as a market for liquid blue-chip collateral and phase out roughly $1.33 billion in collateral—supporting about $1.03 billion in debt as of November 9—including rsETH, osETH, LBTC, tBTC and rETH plus some smaller exposures. The initial step would freeze the affected reserves and set their loan-to-value ratio to zero, halting new supply and new borrowing against them while leaving existing positions untouched. LlamaRisk plans to coordinate an orderly migration with asset issuers and large borrowers, and would consider follow-up measures such as gradually lowering liquidation thresholds if migration proves insufficient. The aim is to shift more complex assets, including restaking tokens and leveraged wrapper strategies, to Aave V4, where risk-premium parameters can price them more granularly. The proposal remains in discussion and requires governance approval before taking effect; next to watch is whether it advances to a vote and how smoothly affected borrowers migrate.