# Aave proposal would raise ETH and BTC collateral efficiency

> A concrete governance proposal now defines prospective collateral and liquidation settings that would permit greater borrowing against covered ETH- and BTC-family collateral if subsequently approved and executed.

- URL: https://riadefi.com/on-chain/2026-09-16-aave-v3-eth-btc-collateral-efficiency/
- Type: Economic change
- Stage: Proposed
- Evidence: confirmed
- Materiality: watch
- Event date: 2026-09-16
- Version: 1, published 2026-09-16 (first published 2026-09-16)
- Follow-up: 2026-09-23
- Advisor-relevant: no
- Affects: Aave v3 (protocol)

## What happened

An Aave ARFC proposed increasing LTVs and liquidation thresholds for specified WETH, wstETH, weETH, WBTC, and cbBTC collateral configurations on Ethereum Core, Arbitrum, and Base. It also proposed lowering Base cbBTC's liquidation bonus and increasing its stablecoin E-Mode parameters.

## What changed

A concrete governance proposal now defines prospective collateral and liquidation settings that would permit greater borrowing against covered ETH- and BTC-family collateral if subsequently approved and executed.

## What did not change

The ARFC has not passed Snapshot, become an AIP, or been executed. Current collateral parameters remain operative, and the proposal does not establish that the higher settings are safe or suitable.

## Confirmed

- The proposal specifies WETH LTV of 81% on Ethereum Core, Arbitrum, and Base, with liquidation threshold changes where listed.
- The proposal specifies higher WBTC and cbBTC parameters, including 81% LTV and 85% liquidation threshold for both assets on Ethereum Core.
- The proposal specifies Base cbBTC at 81% LTV and 84% liquidation threshold, a 6% liquidation bonus, and higher cbBTC Stablecoins E-Mode settings.
- The stated next steps are community feedback, a Snapshot vote, and an AIP before implementation.

## Still open

- Whether the proposal will advance to Snapshot or an AIP.
- Whether approved payloads will retain the proposed parameters without modification.
- The execution date and resulting position-level effects if governance approves the changes.

## What it means for an advisor

- Monitor the governance path because execution would increase maximum leverage and reduce liquidation buffers for covered collateral.
- If the proposal advances, review Aave v3 collateral assumptions and position limits before treating the new parameters as part of the approved operating baseline.

## Sources

1. [[ARFC] Revision of ETH & BTC Collateral Efficiency on Aave](https://governance.aave.com/t/arfc-revision-of-eth-btc-collateral-efficiency-on-aave/25649) · Aave governance forum · 2026-09-16


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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.