A Precautionary Pause at Threshold Network Ripples Into Both Aave and Compound

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• Threshold Network temporarily paused new Bitcoin deposits, tBTC minting and new redemption requests through its app as a precaution during security maintenance, with no exploit disclosed
• Compound’s risk manager Gauntlet proposed zeroing tBTC’s supply cap and borrow collateral factor across Ethereum, Base and Arbitrum markets, while leaving liquidation thresholds unchanged so no existing position becomes liquidatable
• Aave’s guardian multisig separately froze tBTC on Aave V3 Ethereum Core at 10:01 UTC on October 31, 2026, the only market where it could still support new borrowing after earlier deprecation rounds on Base and Arbitrum

Threshold Network, the protocol behind the tBTC bridged bitcoin token, posted on October 31, 2026 at 3:19 PM UTC that it had temporarily paused new Bitcoin deposits, tBTC minting, and new Bitcoin redemption requests through its application as a precautionary measure during security maintenance. The post is specific that pending redemptions already underway can still be paid out in Bitcoin, though final settlement on Ethereum for those pending requests is paused in the meantime. It states that holding, transferring and otherwise using existing tBTC is unaffected, and that no exploit or loss has been disclosed.

That pause, even without a confirmed security incident behind it, was enough to prompt a defensive response from two major lending protocols that list tBTC as collateral. Compound’s risk manager Gauntlet proposed on November 1, 2026 setting tBTC’s supply cap and borrow collateral factor to zero across every Compound market where the token is listed, specifically Ethereum’s USDT and USDC markets, Base’s USDC market, and Arbitrum’s USDT and USDC markets. In each case, liquidation collateral factors were left unchanged, meaning the change blocks new tBTC supply and new borrowing against it without putting any existing position at risk of being unexpectedly liquidated.

Aave took a similar but separately executed step. According to the protocol’s own governance forum, its guardian multisig froze tBTC specifically on Aave V3 Ethereum Core at 10:01 UTC on October 31, 2026, shortly after Threshold’s own pause was announced. Aave’s post explains that Ethereum Core was the only market left where tBTC could still support new borrowing, since the token’s reserves on Base and Arbitrum had already been frozen in earlier, unrelated deprecation rounds. The freeze is intended to stop Aave’s tBTC exposure from growing any further for as long as Threshold’s pause remains in place, and the protocol says it will keep the market frozen until Threshold confirms the situation is fully resolved.

The episode is a useful illustration of how interconnected DeFi lending markets have become with the tokens they list as collateral. A pause announced for precautionary reasons by one bridge protocol, with no loss or exploit confirmed, was still enough to trigger same-day defensive parameter changes at two of the largest lending protocols in the industry, neither of which experienced any direct incident of its own.

Both protocols’ responses leave withdrawals, repayments and liquidations for existing tBTC positions unaffected; only new supply and new borrowing are restricted while Threshold’s pause continues. The full proposal is posted on Compound’s own governance forum.