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Aave Labs Proposes Bitcoin-Collateralized Institutional Lending via Anchorage

Aave Labs has introduced a governance proposal enabling institutional borrowers to secure stablecoin loans against offchain Bitcoin held in Anchorage custody.

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Aave Labs published an Architecture Request for Comments (ARFC) on September 14, 2026, outlining a framework for institutional Bitcoin-backed lending. Titled "Custodied Collateral Lending: Aave V4 Isolated Hub & Spoke," the proposal aims to allow institutional clients to borrow stablecoins without transferring their underlying Bitcoin onto public onchain pools.

Under the proposed model, institutional Bitcoin collateral remains held offchain by Anchorage rather than in smart contract pools managed by Aave, Chainlink, or CustodySync. Borrowing positions would be facilitated through an isolated Aave V4 market structure, separating institutional risk from the protocol's standard permissionless lending markets.

To mirror the offchain collateral onchain, CustodySync—developed using Chainlink infrastructure—would mint and burn non-transferable Custodied Collateral Tokens (CoCTs) tied directly to each borrower's verified custody balance. If a position requires liquidation, Anchorage would execute an over-the-counter sale of the underlying Bitcoin rather than routing collateral through public onchain auction mechanisms. The implementation remains subject to approval by the Aave DAO.

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