Aave DAO passes ARFC proposal to support native BTC as collateral in Aave V4 via Babylon
BIBIBI
AT A GLANCE
Aave DAO has passed an ARFC proposal to introduce native BTC collateral on Aave V4.
Article
Aave DAO passed a proposal to introduce native BTC collateral via Babylon
PANews November 9 news, Babylon posted on X that Aave DAO passed the ARFC proposal on November 9 with 100% votes in favor, and will enable native Bitcoin as collateral on Aave V4 through Babylon Trustless Bitcoin Vaults (TBV). Bitcoin holders can lock native BTC in a self-custodial manner and borrow assets such as USDT and USDC, without wrapping, cross-chain bridges, or third-party custody agreements. The collateral factor and borrowing rates for this integration will be comparable to wrapped assets such as WBTC and cbBTC on the Aave V4 Core Spoke. Aave DAO will share related revenue with Babylon, and part of it will be used to buy back AAVE and BABY. The next step will enter the final AIP stage to activate this integration on the Ethereum mainnet.
Aave DAO passed the ARFC proposal on November 9 with 100% of the vote in favor.
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This proposal aims to enable native Bitcoin as collateral on Aave V4 through Babylon Trustless Bitcoin Vaults.
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Bitcoin holders can lock native BTC in a self-custodial manner and borrow assets such as USDT and USDC.
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The integration still needs to enter the final AIP stage to be activated on the Ethereum mainnet.
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Aave DAO will share related revenue with Babylon, with part of the revenue planned to be used to buy back AAVE and BABY.
AI-assisted interpretation
The following is analysis, separate from reported facts. Verify important claims independently.
This solution allows Bitcoin holders to lock native BTC as collateral and borrow other assets without wrapping, using cross-chain bridges, or third-party custody. However, mainnet integration has not yet been completed.
Why it matters to readers
If the AIP is ultimately approved and activation is completed, native BTC may increase its lending use in Aave V4; the actual effect of the revenue-sharing and buyback arrangements still depends on integration implementation and usage volume.
It involves lending out other assets using BTC, but it is currently still in the follow-up process after the proposal was passed, and cannot yet be considered launched and available.
Risks and unknowns
It has not yet been confirmed whether the final AIP was approved by Aave DAO.
The integration activation time and actual availability of the Ethereum mainnet have not yet been confirmed.
The final collateral factor, borrowing interest rate, and risk parameters have not yet been confirmed.
The report content is a retelling of Babylon's statement on X by PANews.
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Related concepts
ARFC
This term is not in the glossary yet. Browse related concepts in the glossary.
An asset provided by a counterparty to guard against potential losses, which may be liquidated in the event of default to compensate the lender for its loss.
