Aave governance has advanced a proposal that would give Bitcoin-backed borrowers materially more leverage while leaving less room before liquidation.

The proposal from risk service provider LlamaRisk would let users on Aave V3 Ethereum Core borrow as much as $0.81 against each $1 of WBTC or cbBTC collateral, up from $0.73. The liquidation threshold would rise from 78% to 85%.

LlamaRisk said on Sept. 21 that the proposal had advanced to Snapshot and voting would begin in less than 24 hours. The vote result and any implementation remained unverified at the reporting cutoff, so the higher limits are proposed parameters rather than live settings.

The case rests on one year of liquidation data showing that economically meaningful positions generally cleared within minutes. That history was recorded under existing parameters. It supports an argument for greater capital efficiency but cannot establish how the proposed settings would perform during the next extreme move.

Loan-to-value, or LTV, sets the maximum debt that collateral can support. At 73% LTV, $100 of WBTC or cbBTC can support up to $73 of debt before reserve caps, available liquidity, asset eligibility and account-level constraints. At 81%, the same collateral could support up to $81.

The liquidation threshold marks the point where a position becomes eligible for liquidation. On Ethereum Core, the proposal would raise that threshold for WBTC and cbBTC from 78% to 85%.

The raw distance between LTV and the liquidation threshold would fall from five percentage points to four. The last table row expresses that distance as a collateral-price decline relative to the threshold, assuming debt remains unchanged and Bitcoin is the moving leg. Raising both parameters still narrows the borrower’s price cushion because the borrowing limit moves closer to the new liquidation line.

The changes extend beyond Ethereum Core. The proposal would raise Arbitrum WBTC’s ordinary LTV by five percentage points and Base cbBTC’s by eight points. Ethereum Core WETH, wstETH and weETH would each receive a 0.5-point LTV increase. Selected liquidation thresholds would also rise, while Base cbBTC’s liquidation bonus would fall from 7.5% to 6%. A separate Base cbBTC stablecoin E-Mode would move to 82% LTV and an 85% liquidation threshold.