Aave has advanced a governance proposal to raise Bitcoin-backed loan leverage on Ethereum Core, increasing the debt-to-collateral ratio from about 0.73 to 0.81 while tightening the liquidation cushion from roughly 6.4% to around 4.7% at maximum leverage.

The proposal, spearheaded by risk firm LlamaRisk, would allow borrowers to pull up to $0.81 in debt per $1 of WBTC or cbBTC collateral, expanding borrowing power but narrowing the price cushion.

If approved, the changes would also apply to Arbitrum WBTC, Base cbBTC, and Ethereum Core WETH, wstETH, and weETH, with a mix of LTV and liquidation-threshold adjustments, while Base cbBTC’s liquidation bonus would decrease.

Historical data show on Ethereum Core, 7,206 ETH liquidations totaling $618 million and 2,621 BTC liquidations totaling $358 million, with a 99th-percentile liquidation execution time of five minutes, underscoring fast-clearing risk yet with residual exposure during extreme moves.

LlamaRisk’s liquidation-history study (Aug 2025–Aug 2026) indicates historically fast liquidation clearance and potential for greater capital efficiency, though it does not guarantee performance in future extreme market moves or during outages.

In essence, the proposal tightens the price buffer even as it increases borrowing power, prompting questions about risk management for lenders and borrowers alike.

Funding and voting are not yet in place; the proposal has moved to Snapshot, and voting is expected to start within 24 hours of Sept. 21, 2026, with final values subject to governance approval and a subsequent AIP.