Aave Halts New tBTC Deposits in Ethereum Core Market After Threshold Network Minting Pause
Key Takeaways
- •Aave has stopped accepting new tBTC deposits and tBTC-backed borrowing in its Ethereum core market as of Oct. 31, 2026.
- •The restriction followed Threshold Network's suspension of both tBTC issuance and redemption, preventing new tokens from being minted and existing tokens from being redeemed for bitcoin.
- •Threshold Network, formed in 2021 through the merger of Keep Network and NuCypher, operates the tBTC bridge and secures its bitcoin with a decentralized set of signers using threshold cryptography.
- •Adjustments to which assets can be supplied or borrowed in Aave are enacted through on-chain governance informed by independent risk assessments, with LlamaRisk named in the report as Aave's associated risk services provider.
- •Upcoming markers include whether Threshold Network resumes tBTC issuance and redemption and whether Aave's governance makes further changes to tBTC's configuration in the market.
Aave has stopped accepting new tBTC deposits and tBTC-backed borrowing in its Ethereum core market, COINOTAG reported on Oct. 31, 2026. The restriction followed a decision by Threshold Network, the protocol that issues the Bitcoin-backed token, to suspend both issuance and redemption of tBTC. The episode underscores how bridged assets serving as lending-market collateral depend on the infrastructure that issues them.
What happened
The Ethereum core instance is Aave's principal lending market on Ethereum mainnet. In this market, suppliers deposit supported assets into shared liquidity pools, and borrowers can draw liquidity against the collateral they post. With the restriction in force, tBTC can no longer be supplied as new collateral, and new borrowing positions backed by tBTC cannot be opened there.
In Aave's design, whether a listed asset can be supplied or borrowed is set by market-level parameters, and adjustments to those settings are enacted through the protocol's on-chain governance. Independent risk assessments feed into that process — the same category of work COINOTAG's report connects to LlamaRisk.
Background on tBTC and Threshold Network
tBTC is a bridged form of bitcoin that allows holders to deposit BTC and receive a tokenized representation on Ethereum, where it can circulate across decentralized finance applications, including money markets such as Aave. Threshold Network, formed in 2021 through the merger of Keep Network and NuCypher, operates the tBTC bridge. The network secures the bitcoin held by the system through a decentralized set of signers running threshold cryptography rather than relying on a single custodian.
The suspension of issuance and redemption means no new tBTC can be minted and existing tokens cannot be redeemed for underlying BTC while the pause remains in effect — shutting both the entry point for new tokens and the exit route back to bitcoin for as long as the pause holds.
Risk services provider named in the report
COINOTAG's report also references LlamaRisk, the risk services provider that works with Aave. Providers of this kind support Aave's governance by producing risk assessments for the assets listed across the protocol's markets — a role that comes into focus in situations like this one, where a listed asset's issuer has paused issuance and redemption and the asset has been switched off for new supply and borrowing in a core market. From here, the observable markers are whether Threshold Network resumes issuance and redemption, and whether Aave's governance — guided by risk assessments of the kind LlamaRisk produces — makes further changes to tBTC's configuration in the market.
This content was first published on COINOTAG: https://en.coinotag.com/aave-blocks-new-tbtc-deposits-ethereum-core-market
