Babylon advances native Bitcoin lending proposal on Aave V4
Babylon’s proposal to bring native Bitcoin collateral to Aave V4 has entered a new governance stage, but further votes and security reviews remain before launch.
Babylon Labs has submitted a proposal to allow users to borrow stablecoins on Aave using native Bitcoin (BTC) collateral, moving the project to a new governance stage. The Bitcoin-focused developer submitted the proposal on May 25, which passed through a preliminary community vote on June 10. The Aave DAO would receive the first $500,000 in revenue from the integration if approved.
Currently, Aave supports loans against tokenized Bitcoin through Wrapped Bitcoin (WBTC) and Coinbase Wrapped Bitcoin (cbBTC), but these rely on custodians, introducing counterparty risks. The proposal remains in the Aave Request for Comment (ARFC) stage, awaiting community feedback and risk analysis. If consensus is reached, it will proceed to a three-day offchain Snapshot vote, requiring 320,000 AAVE-equivalent votes in favor, followed by a formal onchain vote meeting quorum and approval requirements.
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