CryptoSlate
Threshold Network suspended tBTC minting and Bitcoin redemptions during undisclosed security maintenance, prompting Aave to restrict new deposits and borrowing against the token. About 1,760 tBTC worth $136.6 million was supplied to Aave's Ethereum V3 Core market, roughly 42% of tBTC in circulation.
Threshold said tBTC remains fully backed, with about 4,320 BTC in bridge wallets against 4,185 tBTC in circulation, and reported no lost funds or unauthorized minting. It has not disclosed the security issue or given a date for restoring redemptions.
Why it matters
The pause blocks holders from converting tBTC directly into native Bitcoin. Existing tokens remain transferable across Ethereum and layer-2 networks, but users seeking Bitcoin must rely on secondary-market buyers while redemptions are suspended. A discount to Bitcoin or thinning liquidity could make it harder for lenders to exit positions through withdrawals or liquidations.
Aave's restriction prevents new tBTC deposits and stops the token from increasing users' borrowing power. Existing users can still repay loans and withdraw eligible collateral, while liquidations continue under existing risk parameters. The action applies to Aave's Ethereum Core reserve; tBTC markets on Base and Arbitrum were already frozen.
Market impact
Risk manager Gauntlet also placed a Morpho USDC market backed by tBTC collateral on its emergency exclusion list. It withdrew about 65,000 USDC in available liquidity, leaving roughly 640,000 USDC supplied, and warned that the redemption halt could complicate lender exits during liquidations.
Threshold said pending transactions would be completed when operations resume and urged users not to send Bitcoin to previously generated deposit addresses or repeat pending transactions. It pledged another security update within 24 hours of its Oct. 31 announcement, or sooner if circumstances change.
Frequently asked questions
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How much tBTC was supplied to Aave's Ethereum Core market?
About 1,760 tBTC worth $136.6 million was supplied, roughly 42% of tBTC in circulation.
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Why did Threshold suspend tBTC redemptions?
Threshold suspended minting and redemptions while conducting security maintenance. It has not disclosed the specific issue.
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Does Threshold say tBTC is fully backed?
Yes. Threshold reported about 4,320 BTC in bridge wallets against 4,185 tBTC in circulation, and said no funds were lost.
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What can Aave users still do with existing positions?
Users can repay loans and withdraw eligible collateral. Liquidations continue under existing risk parameters, while new tBTC deposits and increased borrowing power are restricted.
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How could the redemption pause affect lenders?
Holders seeking native Bitcoin must rely on secondary-market buyers. A discount or weaker liquidity could make lender exits and collateral liquidations more difficult.
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