Aave’s Native Bitcoin Plan Moves Forward, But Governance Has Questions
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TL;DR: Babylon Labs has advanced a proposal to bring native Bitcoin collateral to Aave V4 without requiring wrapped BTC or a central custodian. The plan still faces community review, risk analysis and governance votes. Bitcoin could become collateral for Aave loans without first being handed to a custodian or converted into a freely traded wrapped token. That is the proposal Babylon Labs took to Aave’s governance forum on October 14, advancing a project that has been under discussion since an earlier temperature check. The design uses Trustless Bitcoin Vaults. A user locks BTC into a Taproot-based arrangement on the Bitcoin network, while Aave V4 records restricted collateral units inside a dedicated lending market. Those accounting units are not intended to circulate like ordinary wrapped Bitcoin.
First reported by NewsBTC. This page is a short excerpt; the full text is theirs.
