Threshold pauses tBTC minting and redemptions; Aave freezes tBTC reserve

Threshold Network has paused minting and redemptions of tBTC, a token that brings bitcoin onto Ethereum on a one-to-one basis. In a post on its official X account at about 7:35 a.m. KST on Oct. 31, Threshold said it had temporarily paused new BTC deposits and tBTC minting, as well as new bitcoin redemption requests through the Threshold app, "as a precaution while security maintenance is completed." It gave no date for resuming operations.

Users deposit bitcoin to receive the same amount of tBTC on Ethereum and return tBTC to get their bitcoin back. Threshold said pending redemptions may still be paid on Bitcoin, but final settlement on Ethereum is paused and some transactions may be delayed. It added that the pause does not affect holding, transferring or using tBTC.

Do not reuse old deposit addresses

Threshold asked users not to send BTC to previously generated deposit addresses and not to initiate new deposit, mint or redemption operations through alternative interfaces during the pause. Users who have already deposited BTC should keep their deposit receipt and transaction hashes and should not repeat the transaction to try to clear a pending status. Status can still be checked in the app's Explorer.

Threshold did not say what the maintenance involves or whether there had been any attack attempt. It said only that it would share confirmed updates, including an estimated time for resuming normal operations, through its official channels.

tBTC can no longer be added as new collateral

The largest pool of tBTC sits on lending protocol Aave. After Threshold's announcement, LlamaRisk, which handles risk management for Aave, recommended a pre-emptive freeze of tBTC on the Ethereum Core market. A guardian multisig with emergency powers executed the freeze at 7:01 p.m. KST on Oct. 31, and the freeze transaction appears on the Ethereum blockchain at that time.

The freeze blocks new tBTC deposits and cuts the loan-to-value ratio (LTV), the share of deposited tBTC that can back new borrowing, to zero. According to LlamaRisk, repayments, withdrawals and liquidations continue. The 78% liquidation threshold is unchanged, so the freeze by itself does not change the health factor of existing loans. No other asset or market is affected.

Blockchain records on the evening of Oct. 31 show 1,762 tBTC deposited on Aave's Ethereum Core market, about 42% of the 4,185 tBTC issued on Ethereum. At Binance's bitcoin price of about $77,475, that is worth roughly $136.5 million. About 2.6 tBTC has been borrowed. tBTC on Aave's Base and Arbitrum markets had already been frozen in earlier asset deprecation rounds. LlamaRisk said it would propose restoring the reserve once tBTC operations return to normal.

An unbacked mint attempt was stopped in May

This is not the first time Threshold has halted a function for security reasons. According to Threshold's May recap, published June 4, an attempt was made on May 18 to mint tBTC without depositing bitcoin. It failed, no invalid tBTC was issued and no user funds were lost. Threshold then paused Optimistic Minting, a faster path in which authorized operators issued tBTC in advance, "until further notice." Since then all mints have gone through the standard path that verifies proof of the bitcoin transaction, which lengthened minting time to about six to seven hours.

tBTC is not listed on any Korean won market. Threshold Network's governance token T is listed on the Korean won markets of Upbit and Bithumb. At 8:32 p.m. KST on Oct. 31 it traded at 6.19 won on Upbit, up 1.6% from the previous close. Bithumb quoted 6.137 won at the same time, and Binance's price of $0.00464 converted to about 6.19 won, leaving almost no gap between Korean and global prices.