News · DeFi
An Aave governance proposal outlines integrating Babylon Trustless Bitcoin Vaults across two V4 Spokes without bridges or third-party custodians.
Key point 1 of 3
01
Babylon Labs submitted an ARFC proposal to onboard non-custodial native BTC as collateral to Aave V4 via Trustless Bitcoin Vaults .
Key point 2 of 3
02
Collateral is locked in Bitcoin Taproot UTXOs, using a restricted ERC-20 unit on Ethereum and ZK fraud proofs via the BaBe protocol .
Key point 3 of 3
03
Liquidations resolve immediately in WBTC on Aave, leaving permissioned arbitrageurs to settle the multi-day native Bitcoin redemption .
Context
Babylon built out a trustless Bitcoin staking network currently holding over 40,000 BTC. It is now attempting to port that non-custodial architecture to decentralized money…
Why it matters
If approved, Aave users will be able to draw stablecoin liquidity against Bitcoin without surrendering custody to centralized bridges or custodial wrappers, while creating borrow…
What to watch
Risk parameter recommendations from Aave's risk service providers and the subsequent timeline for an on-chain Aave DAO governance vote.
Sources
Built from 2 primary sources, machine-checked before publication.
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