Aave has proposed deprecating 75 reserves and six protocol deployments, covering $98.1 million in supplied assets and $15.6 million in outstanding debt. The affected reserves have likely seen reduced utilization or pose tail risk, prompting governance action to streamline the protocol. This is one of the larger reserve cleanup proposals in Aave's history by asset count.
Armada's crypto repo desk uses Aave utilization rates and borrow rates as DeFi benchmark comparables when pricing repo against BTC, ETH, and SOL collateral. If reserves supporting these assets are deprecated, available liquidity depth and rate signals may shift, requiring updated LTV and haircut assumptions. Reduced DeFi liquidity can also increase the spread Armada must offer to remain competitive with on-chain alternatives.