Governance proposal aims to raise borrowing capacity on major assets
Aave is advancing an ARFC proposal to increase loan-to-value and liquidation-threshold parameters for ETH and Bitcoin-linked collateral across Ethereum, Base, and Arbitrum deployments.
The proposal would raise the WETH loan-to-value ratio to 81% and liquidation threshold to 84%, allowing users to borrow more against the same collateral before facing liquidation risk. The changes would apply to WETH, WBTC, cbBTC, wstETH, and weETH across the three networks.
Higher LTV ratios increase capital efficiency by narrowing the gap between maximum borrowing capacity and liquidation thresholds. Users holding these assets as collateral would unlock additional borrowing power without depositing more funds.
The proposal is moving through Aave’s ARFC (Aave Request for Comments) process, a governance stage that precedes formal voting. Existing market parameters remain in effect until the community approves the changes through governance.
The ARFC process allows the Aave community to debate and refine proposals before they reach a formal vote. Raising collateral efficiency is a common governance focus in lending protocols, as it directly affects user leverage and protocol competitiveness.
Aave did not specify proposed parameter changes for WBTC, cbBTC, wstETH, or weETH, nor did it provide current LTV and liquidation-threshold figures for WETH to allow direct comparison. The protocol also did not announce a governance vote timeline.
