LlamaRisk proposes to phase out approximately $1.33 billion in collateral from Aave V3 Core.

On November 11, according to The Defiant, LlamaRisk, an Aave risk service provider, submitted a governance proposal recommending the repositioning of Aave V3 Core as a highly liquid blue-chip collateral market and the gradual exit of approximately $1.33 billion in collateral (as of November 9, these assets support roughly $1.03 billion in debt).

The proposal primarily targets rsETH, osETH, LBTC, tBTC, and rETH, as well as certain assets with smaller exposures. Initial measures involve freezing related reserves and setting the LTV to 0 to halt new deposits and borrowings against these assets, while existing positions will remain unaffected. LlamaRisk plans to coordinate an orderly transition with asset issuers and major borrowers; should migration progress prove insufficient, subsequent measures such as progressively lowering liquidation thresholds will be considered.

The proposal aims to redirect more complex assets, such as restaking assets and leveraged wrapping strategies, to Aave V4, allowing V4 to implement finer-grained pricing via parameters like risk premiums. At present, the proposal remains in the discussion phase and will only take effect after receiving governance approval.