Aave’s Native Bitcoin Plan Moves Forward, But Governance Has Questions
Summary
Babylon Labs has advanced a governance proposal to let users borrow through Aave V4 using native Bitcoin as collateral, without wrapping BTC or placing it with a central custodian. The design locks BTC in Taproot-based Trustless Bitcoin Vaults and records restricted collateral units in a dedicated Aave market intended to isolate risks. The proposal remains at the Request for Comment stage; risk parameters, community review, a Snapshot vote and an on-chain proposal are still required. Forum participants have raised questions about emergency pauses and control of vault infrastructure.
