Babylon advances native Bitcoin lending proposal on Aave V4
Summary
Babylon Labs proposed enabling users to borrow stablecoins on Aave using native Bitcoin as collateral. BTC would remain locked in vaults on Bitcoin, while a non-transferable Ethereum token represents the collateral, avoiding wrapped or bridged BTC and their custodial risks. Aave DAO would receive the first $500,000 in qualifying annual revenue. The proposal is still at the ARFC feedback and risk-analysis stage; further community and governance votes are required before implementation. Aave already accepts custodial wrapped Bitcoin tokens such as WBTC and cbBTC.
