Aave proposes higher AAVE collateral LTV and liquidation thresholds

What happened

Aave governance created proposal 255 to increase AAVE collateral LTV and liquidation thresholds on Ethereum Core and Arbitrum.

What changed

The executable proposal would raise Ethereum Core AAVE LTV from 66% to 69% and liquidation threshold from 73% to 76%, and Arbitrum AAVE LTV from 63% to 66% and liquidation threshold from 70% to 73%.

What did not change

The vote had not closed or executed by February 28, so the on-chain collateral parameters were not yet changed within this backfill window. No other asset or Aave instance was included.

Confirmed

• Proposal 255 was created on February 25, 2025 and opened for voting on February 26.
• The proposal specifies three-percentage-point increases to both LTV and liquidation threshold on Ethereum Core and Arbitrum.
• Its motivation explicitly invokes greater borrowing power, capital efficiency, and a competitive lending environment.

Still open

• The final vote and execution occurred outside the February event-date boundary and are not drafted here.
• The retained proposal does not establish how borrower behavior or AAVE liquidity would respond after any execution.

What it means for an advisor

• Apply the written Aave kill criterion because governance publicly justified collateral-risk parameters partly through capital-efficiency and competitiveness goals.
• Treat new Aave exposure as unavailable pending human review of the approval memo; the event workflow itself does not change the memo or transact.
• Reassess endogenous-collateral and liquidation assumptions before relying on the proposed higher thresholds.