Babylon Labs Submits Governance Proposal to Enable Native Bitcoin Collateral on Aave V4
A new framework under community review would permit borrowing against Bitcoin held securely in trustless vaults without transferring it off its native network.
Babylon Labs submitted a governance proposal on October 14 seeking to integrate native Bitcoin as eligible collateral within the upcoming Aave V4 deployment. The initiative, titled "Onboard Native BTC as Collateral to Aave V4 via Babylon Trustless Bitcoin Vaults," aims to let users borrow stablecoins while keeping their underlying Bitcoin secured on the Bitcoin base layer.
The proposal is currently at the Aave Request for Final Comments stage following a successful temperature check. Under Aave's governance framework, the technical blueprint must complete community review and risk assessment from specialized service providers before proceeding to a Snapshot consultation and subsequent on-chain binding vote.
Market data showed Aave trading at $148.30, down 13.16 percent over the previous seven-day period against a weekly peak of $171.52, while retaining a 16.59 percent gain over thirty days with a market capitalization of $2.29 billion. The proposal focuses on potential protocol fee generation and cross-chain asset integration over longer-term operational horizons.
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