Aave has restricted new deposits and borrowing on its Ethereum Core market for tBTC, a tokenized bitcoin, after Threshold Network suspended tBTC minting and redemptions for security maintenance. The freeze affects around $136 million in tBTC supplied to the decentralized finance protocol.
Threshold pauses tBTC operations for security review
Threshold Network, which operates the tBTC protocol, halted bitcoin deposits, token minting, and redemptions from October 31. The network has not disclosed the specific nature of the security issue that prompted the pause.
tBTC is a token that lets bitcoin holders bridge their holdings to the Ethereum ecosystem and use them within decentralized finance, serving as collateral for loans or trading across Ethereum and other compatible networks.
Threshold reported that approximately 4,320 bitcoin are currently held in its bridge wallets, while around 4,185 tBTC are in circulation. This figure places bridge reserves roughly 135 bitcoin higher than the total tokens issued.
Threshold Network confirmed that tBTC is fully backed with no loss of funds, and investigators have found no evidence of unauthorized token minting.
Despite the pause, existing tBTC can still move across Ethereum and layer-2 blockchains. However, new bitcoin deposits, token minting, and redemption requests are on hold, with pending transactions set to be processed once normal operations resume.
Threshold has not announced when the bridge will reopen but stated that the situation remains contained and that full services will be restored after the security fix.
Mini dictionary: Threshold Network is a protocol specializing in cryptographic infrastructure, enabling secure tokenized assets and decentralized bridges between blockchain networks. tBTC is its flagship asset, allowing users to use bitcoin on Ethereum-based systems.
Aave, Gauntlet and risk management measures
Aave, a leading decentralized lending protocol, received a recommendation from risk advisor LlamaRisk to freeze new deposits and borrowing for tBTC on its Ethereum Core market. Aave’s guardian multisig address enacted this freeze on October 31 at 10:01 UTC.
At the time of the action, about 1,760 tBTC—valued at $136.6 million—had been supplied to the market, representing roughly 42% of all tBTC in circulation.
| Platform/Provider | Action | tBTC Volume Affected |
|---|---|---|
| Aave (Ethereum Core Market) | Deposits & borrowing frozen | 1,760 tBTC ($136.6M) |
| Gauntlet (Morpho Lending Market) | 65,000 USDC withdrawn | Backed by tBTC collateral |
As a result of the freeze, users can no longer deposit tBTC or borrow against it, but are still able to repay loans, withdraw eligible collateral, and undergo liquidations under existing protocols. The restriction only affects the Ethereum Core market; tBTC markets on Base and Arbitrum networks remain previously frozen.
LlamaRisk stated that it is closely monitoring tBTC collateral positions and trading liquidity and will recommend restoring services when it determines conditions are safe.
Risk manager Gauntlet also intervened, withdrawing around 65,000 USDC from its Morpho lending vaults that were backed by tBTC collateral, leaving approximately 640,000 USDC in the protocol.
Gauntlet cautioned that the ongoing pause could lead to decreased liquidity for tBTC, potentially making redemptions harder as holders may have to rely on secondary markets. If tBTC trades at a significant discount to bitcoin, lenders holding the token as collateral could face more challenging liquidation scenarios.
Threshold advised users not to send bitcoin to old deposit addresses or attempt to repeat pending transactions. The network has promised an additional security update within 24 hours from the previous notice or sooner if the situation evolves.
