Wrapped BTC as DeFi collateral: two venues hold 77% of what is covered

Aave v3 on Ethereum and Morpho Blue on Base account for most of the collateral in this snapshot. Their rules differ: Aave can revise asset parameters through governance and risk stewards, while Morpho fixes parameters when each market is created.

The chart covers five protocol-and-chain venues across Aave v3, Morpho Blue and Spark. It locates the collateral; it does not measure how vulnerable the underlying loans are.

How much lies outside the covered set#

For scale, the holder-type series counts 146k BTC held by lending market contracts of every labelled lending protocol on the same date, 26k more than the covered collateral. The difference does not identify additional collateral. It can include liquidity supplied to Aave, Morpho or Spark without being pledged, and balances at lending protocols outside the covered set. Those categories cannot be separated with these totals, and unlabelled lending contracts are absent from the comparison. The gap is not an estimate of missing collateral.

A venue here is a protocol on a chain. Morpho Blue appears twice because its Base and Ethereum deployments have separate markets, separate parameters and separate liquidators.

Two ways of setting risk#

Aave v3 sets risk parameters per asset through governance, advised by paid risk providers. When WBTC's custodian announced its move to a joint venture in 2024, LlamaRisk first proposed cutting WBTC's loan-to-value to zero for new borrowing; the version that went forward, agreed with Chaos Labs in September 2024, lowered the loan-to-value from 73% to 70%, trimmed the liquidation threshold by one percentage point, tightened supply and borrow caps and doubled the reserve factor. The same process raised WBTC's supply cap in June 2026 when utilisation approached the ceiling. Parameters on Aave move through votes and stewards, with a public record.

Morpho Blue's parameters are set once, per market. Each market is created with a fixed collateral, loan asset, liquidation loan-to-value, oracle and rate model, and none of them changes afterwards. The cbBTC/USDC market on Base runs at an 86% liquidation threshold, and the liquidation incentive is a formula of that threshold, paid entirely to the liquidator. Risk management happens one level up, in vaults whose curators set caps and allocate deposits across markets. A curator can stop routing new deposits to a market. The threshold stays where it was set for the market's life.

The 55k BTC at Aave v3 on Ethereum and 38k at Morpho Blue on Base therefore sit under different processes for revising risk. They do not form two uniform loan portfolios: Aave sets parameters per asset and Morpho per market. A venue-level total cannot recover the distribution of borrowing or liquidation thresholds within either.

What the concentration tells us#

The result identifies where to look first when examining the covered collateral. A risk assessment would also need the relevant oracle configurations, debt and collateral per position, and available liquidation liquidity. Those measurements are not in this chart, so the 77% alone cannot estimate losses or establish that liquidation risk is concentrated in the same proportion.

Coverage matters to the ranking. Adding a venue could change its share without any existing position moving. The chart is also a snapshot: collateral history on this site starts in January 2026 because earlier figures had gaps at month boundaries. It does not establish how the concentration developed.