Aave freezes tBTC supply and borrowing following redemption pause

Aave has implemented restrictions on its V3 Ethereum Core market, freezing new tBTC deposits and borrowing. This decision follows a move by Threshold to pause redemptions of tBTC into native Bitcoin.

While new supply and borrowing are blocked, existing users can still repay loans and perform withdrawals where permitted by protocol rules. However, withdrawals will return tBTC rather than native Bitcoin. The liquidation threshold for the asset remains at 78%.

The distinction between withdrawing from Aave and redeeming through Threshold is critical: withdrawing moves tBTC to a user's wallet, whereas redemption involves a bridge process to release native BTC on the Bitcoin network. The pause in redemptions affects the bridge mechanism, which requires cooperation from a supermajority of signers and a guardian layer to operate.