Aave Freezes tBTC Reserve in Ethereum Core After Minting and Redemption Halt
Key Facts
Aave froze the tBTC reserve in its Ethereum Core market after the Threshold network suspended minting and redemption on October 31, 2026, according to risk management firm LlamaRisk’s account of the event. The multisig wallet executed the transaction at 10:01 UTC, after LlamaRisk prepared and submitted the freeze proposal to it. The measure aims to stop new tBTC units from being added to the market or used to increase borrowing capacity. LlamaRisk stressed that the freeze does not halt market activity entirely, as users can withdraw the token and repay loans, while liquidations continue. Borrowing against other assets also remains available as usual.
The decision was limited to a specific part of Aave V3, which listed tBTC in the Ethereum Core, Base and Arbitrum markets. The token’s reserves in Base and Arbitrum had already been frozen in previous asset wind-down rounds, according to LlamaRisk. That made Ethereum Core the only market still allowing new borrowing backed by tBTC before the latest freeze. The firm said the measure applies only to tBTC in that market and does not affect any other reserve. It added that no Aave market was paused because of the decision.
For existing positions, LlamaRisk said the reserve freeze does not change tBTC’s liquidation threshold, so the measure does not alter the health factors of existing positions. Nor does the freeze alone make any position eligible for liquidation. This means the new restrictions concern adding tBTC to the reserve and using it to open additional borrowing capacity, while functions for managing existing loans remain available under the previous rules. According to the statement, liquidations continue, and borrowers can repay or withdraw. The statement announced no changes to the protocol’s other reserves or any market suspension.
Threshold describes tBTC as a decentralized wrapped bitcoin, backed 1:1 by bitcoin and secured by threshold cryptography, according to the network’s FAQ page. In its August 2026 review, the network said cumulative minting since the protocol’s launch had exceeded 30,000 tBTC, while cumulative transaction volume across the bridge had topped 5 billion dollars. These figures provide context on the asset’s use before minting and redemption were suspended. The suspension means the network’s minting and redemption route is not operating during the measure, while tBTC holders can rely on trading in secondary markets. LlamaRisk’s statement did not give a reason for Threshold’s decision or technical details about the suspension.
In its September 2026 review, Threshold said its team had worked on the core components securing tBTC, including the signing library, bridge contracts and node software, as well as stress testing, hardening code paths and expanding test coverage. The network said security improvements would continue during the fourth quarter. The update does not establish a direct link between that work and the October suspension of minting and redemption. LlamaRisk said it would monitor Threshold updates, tBTC positions and secondary-market liquidity. It added that it would propose measures to restore the situation after verifying that tBTC operations had returned to normal, and publish the update in the governance discussion.
In the market, the AAVE token closed at 138.28 dollars on November 1, 2026, according to EL7 data. On October 31, the platform had published a separate story about unfreezing Aave V3 reserves while temporarily keeping the loan-to-value ratio at zero. The current freeze concerns the tBTC reserve in Ethereum Core, while LlamaRisk’s statement gives no price impact of the decision on the AAVE token. The next development linked to the story depends on a LlamaRisk update after Threshold operations are confirmed to have returned to normal, followed by proposed measures to restore the situation.