Aave has adjusted the loan-to-value (LTV) for specific collateral types to zero, directly reducing borrowing headroom for users. A $10,000 collateral position loses $1,500 of borrowing capacity under this change. The health factor for existing loans remains at 1.33.
The adjustment prevents users from drawing new loans or increasing existing ones against the affected collateral. The asset's value continues to support an active loan and shields against liquidation, but its utility for generating additional debt is eliminated.
Zero LTV means a specific asset can no longer back new borrowing on Aave. For existing loans, any previously available headroom—the difference between maximum borrowable amount and current debt—drops to zero for that collateral. The health factor remains stable because the underlying collateral value still supports the active loan.
Users who relied on these assets for flexible borrowing or to maintain a liquidity buffer face reduced on-chain capital efficiency, as a portion of their deposited collateral can no longer generate additional debt.
