# Freeze stETH, Increase stETH Liq. Threshold to 90%, Pause ETH Borrowing
AI summary
This Aave proposal aims to reduce risks associated with stETH, a token representing staked Ethereum, due to its price fluctuations against regular Ethereum (ETH). It proposes three actions: freezing the stETH market to prevent new loans, increasing the liquidation threshold for stETH to 90% to give existing borrowers more leeway, and pausing ETH borrowing to prevent users from increasing their risk exposure. These measures are designed to protect Aave from potential losses if stETH's price significantly deviates from ETH.
If passed, new loans using stETH as collateral will be halted, and existing stETH borrowers will have a higher margin before their collateral is liquidated. ETH borrowing will also be temporarily disabled. This benefits the overall Aave protocol and its token holders by reducing systemic risk, but it restricts new lending and borrowing opportunities for users.
Voting results
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0 votes > 5% VPFull proposal
Freeze stETH, Increase stETH Liq. Threshold to 90%, Pause ETH Borrowing
AIP-83
Author(s): Paul Lei, Jonathan Reem, Nick Cannon, Watson Fu, Tony Salvatore, Sarah Chen
Freeze stETH, Increase stETH Liq. Threshold to 90%, Pause ETH Borrowing
Simple Summary
Mitigate risk to Aave v2 markets relating to the price deviation of stETH/ETH.
Abstract
stETH has emerged over recent months as one of the most popular collateral types on AAVE. Many users have deposited stETH and borrowed ETH a…