# Aave proposes higher AAVE collateral LTV and liquidation thresholds

> 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%.

- URL: https://riadefi.com/on-chain/2025-02-25-aave-v3-aave-collateral-ltv-lt-increase/
- Type: Economic change
- Stage: Proposed
- Evidence: confirmed
- Materiality: critical
- Event date: 2025-02-25
- Version: 1, published 2026-08-22 (first published 2026-08-22)
- Advisor-relevant: yes
- Affects: Aave v3 (protocol)

## 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.

## Sources

1. [Update AAVE Token LTV/Liquidation Percentages](https://vote.onaave.com/proposal/?proposalId=255) · Aave DAO · 2025-02-25


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Published by Ketju Research on RIADeFi (https://riadefi.com). Educational research for financial professionals; not investment, legal, tax, or compliance advice.