The Aave lending protocol is considering a significant change to the treatment of the Dai (CRYPTO:DAI) stablecoin within its ecosystem.

A proposal presented by the Aave Risk Framework Committee (ARFC) and supported by the Aave Chan Initiative (ACI) team aims to revise DAI's loan-to-value (LTV) ratio to 0% across all Aave platforms.

This move is designed to mitigate risks while having a minimal impact on users, as DAI constitutes a small fraction of the collateral on Aave (CRYPTO:AAVE), and alternatives like USDC (CRYPTO:USDC) and USDT (CRYPTO:USDT) are available for users to switch to.

Additionally, the proposal, which was made public on April 2, includes plans to eliminate sDAI incentives within the Merit program from its second round onwards.

This strategy reflects Aave's broader efforts to adjust its risk management protocols in relation to DAI, amid growing scrutiny and adjustments within the decentralised finance (DeFi) space.