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Aave passes proposal to reduce USDSLTV to 0, remove collateral eligibility, and raise reserve factor to 25%

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2025-12-04 03:03:34
The Aave community has approved proposals to remove USDS mortgage eligibility (LTV adjusted to 0), remove it from e-Mode, and increase the reserve factor (RF) from 10% to 25%, and is currently awaiting the final implementation of the AIP. The main reasons are the decline in USDS revenue contribution, low mortgage utilization, and latent risk exposure from the issuance mechanism.
Rune, founder of Maker DAO, responded that the proposal had a misunderstanding of how Spark, Grove and other Stars borrowed from Sky, and in fact paid reasonable interest rates and settled regularly. He stressed that if Sky significantly improves transparency and scalability through DataHub, Grove and Sentinel Network in the future, USDS still has hope to return to the Aave collateral list and promote wider adoption.
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