LlamaRisk Proposes Phasing Out $1.33B of Collateral from Aave V3 Core

A risk manager proposing to shrink a lending market's collateral base by more than a billion dollars is a notable shift in how DeFi protocols think about asset quality — favoring liquidity over volume. The immediate impact falls on borrowers using the flagged collateral, who would face a managed wind-down rather than an abrupt liquidation, while the broader signal is that Aave's risk posture may be tightening. Whether the plan survives governance debate, and how much of the $1.03 billion in backed debt actually exits versus migrates, is the open question.