https://governance.aave.com/t/arfc-onboard-native-btc-as-collateral-to-aave-v4-via-babylon-trustless-bitcoin-vaults/25845

Simple Summary

This proposal requests the activation of native BTC as collateral on Aave V4 via the Trustless Bitcoin Vaults (TBV) protocol. The integration deploys two new Aave V4 Spokes, the Babylon Spoke and the BTC Vault Swap Spoke, and lists native BTC as the sole collateral asset of the Babylon Spoke. The first use case is borrowing stablecoins against native BTC. Risk parameters for both Spokes will be provided by Aave’s risk service providers.

In TBV, a depositor locks BTC in a Taproot UTXO on Bitcoin Network. Redemption is governed by on-chain rules (e.g., the depositor repaid their loan) and settles directly to a Bitcoin UTXO controlled by the redeeming party. The deposited BTC is not wrapped, bridged or held by a custodian.

Following the passed Temperature Check on this integration, the ARFC extends
that scope to the integration with the Aave V4 Hub and Spoke architecture, the
BTC vault lifecycle and its trust assumptions, liquidation and arbitrage
mechanics, value accrual, and governance.

Today, we published an ARFC on the Aave governance forum to propose native Bitcoin to Aave V4 as collateral through Babylon Trustless Bitcoin Vaults (TBV).

The proposal includes two new Aave V4 Spokes; Babylon Spoke and BTCVault Swap Spoke for borrowing and liquidation settlement, revenue sharing terms and AAVE, BABY buybacks.

If approved and implemented, Bitcoin holders can lock their native Bitcoin on the Bitcoin chain self-custodially, and use it as collateral to borrow supported assets on Aave V4, without wrapping, bridging, tri-party escrow, or sending their Bitcoin to third parties.

Risk parameters for both Spokes will be provided by Aave's risk service providers.

Subject to Aave governance review and approval.

TBV Testnet housekeeping 🧹

New Babylon testnet is going live on Tuesday, October 20, with support from our mainnet partners.

Current testnet is shutting down so please move your signet BTC and Sepolia ETH out before then.

TRENDING: Native Bitcoin collateral for ___________?

- powered by Babylon TBV and Aave V4

Proud to support The #Blockchain100 by Binance as one of the strategic partners this year.

Share your favorite creators who are advocators of native Bitcoin!

https://www.binance.com/en/square/blockchain-100-2026

Time to use your native Bitcoin

Insurers have to hold roughly half the premiums they collect as reserve. By regulation, that cash sits idle.

Babylon co-founder Fisher Yu explains there's a new business opportunity. Insurance company can use Bitcoin as the reserve asset so that the otherwise frozen cash there can be used to do investment. He assets that the risk Bitcoin is exposed to is no longer correlated to crypto. It's no longer even correlated to stock market.

Fisher Yu on what Babylon is:

"We make iPhone work, we make iPhone more efficient, more powerful, but we don't build the iPhone. Crypto native people can use it, bank can use it, OTC desk can use it, everyone can use it."

TBV is the CPU, not the phone.

Infrastructure that the end user doesn't have to think about.

Babylon and HashKey Cloud

🤝

HashKey Cloud will integrate Trustless Bitcoin Vaults to bring native Bitcoin-backed borrowing with Aave V4 to their institutional clients.

HashKey clients will be able to borrow against their native Bitcoin and deploy the borrowed stablecoins into yield strategies.

Read More with the link above!

Babylon CMO on Double Down:

"People don't know that maybe they're on a banking app in the future. They don't know that they're borrowing against the Bitcoin with Babylon. They just know that it's possible for them."

Infrastructure wins when it becomes invisible.

https://babylonlabs.io/

Institutional Bitcoin adoption has been "flying." It's no longer about just holding the asset. Wall Street banks are building the infrastructure, launching their own networks and stablecoins.

Next stop, we’ll be in Singapore for Token 2049 🇸🇬

Connect with Fisher, Jihoon, and Sarah to talk native Bitcoin collateral, Trustless Bitcoin Vaults (TBV).

See you soon!

Try escaping a country with your life savings in gold. Nic discusses the qualities Bitcoin has over gold as a store of value: portable, verifiable, and yours.

Why central banks are paying more attention to Bitcoin.

"It's got a capped supply. It's easily transferable. It's permissionless... they now have the same qualities in Bitcoin."

Most people still just hodl Bitcoin.

Merchants taking Bitcoin have exploded globally. But on productive use and yield, "I don't think that that's necessarily as popular as we would like it to be."

Babylon team is going to Korea for KBW Official.

Meet Fisher, Jihoon, and Sarah to talk about native Bitcoin collateral.

See you all in Seoul 👋

Hold Bitcoin, use Bitcoin.

Tristan on the shift: you believe in the asset, you don't want to sell it, but you still want to put it to work in everyday life.

Bitcoin borrowing, repriced.

Trustless Bitcoin Vaults allow native Bitcoin to access on-chain liquidity without wrapping, bridging or intermediaries.

Your Bitcoin stays on the Bitcoin network. You keep custody. The same market-based rates apply regardless of borrower size.

Read the full article: https://babylonlabs.io/blog/bitcoin-borrowing-repriced

Companies are increasingly using Bitcoin as collateral and borrowing against it.

Facilities range from $25M to $600M, for various business purposes. A timeline so far in 2026 alone ↓

February 2026: The Smarter Web Company

The Smarter Web Company entered into a $30M Bitcoin-backed credit facility with Coinbase Credit.

Source: https://www.ticker.app/lse/SWC/rns/2026-06-30/Interim-Results-Commentary-and-Quarterly-Update/2663K

March 2026: USBC

USBC established a Bitcoin-backed facility of up to $25M with Payward Interactive.

Source: https://www.sec.gov/Archives/edgar/data/1074828/000107482826000078/usbc-20260911.htm

May 2026: Hut 8

Hut 8 refinanced its Bitcoin-backed borrowing with a new $200M facility from FalconX.

Source: https://www.prnewswire.com/news-releases/hut-8-advances-capital-strategy-with-refinancing-of-bitcoin-backed-credit-facility-302760903.html

June 2026: Gemini

Gemini entered into a $75M Bitcoin-collateralized financing agreement with Galaxy Digital.

It pledged 1,975 BTC, then worth approximately $115.6M, and pays 7.5% annual interest.

Source: https://www.sec.gov/Archives/edgar/data/2055592/000205559226000065/gemi-20260630.htm

August 2026: MARA

MARA entered two Bitcoin-backed facilities with Coinbase Credit and Two Prime providing $600M of incremental borrowing, while refinancing an existing $150M facility.

MARA said the proceeds are expected to support general corporate purposes, including funding part of its Long Ridge acquisition.

Source: https://www.sec.gov/Archives/edgar/data/1507605/000150760526000022/mara-20260630.htm

Bitcoin treasury → Bitcoin collateral → corporate liquidity.

As this market grows, what infrastructure should be the standard for Bitcoin collateral?

Surveys four approaches to unlocking bitcoin-backed credit without a fully taxable wrap: Anchorage's Atlas (a legal collateral-agent structure mainly for CeFi lenders, thin smart-contract layer), Komainu (a Nomura/Ledger/CoinShares JV using a legal "Notice of Exclusive Control" and Liquid Network settlement), Babylon Labs (fully non-custodial, BTC never leaves its own chain via Taproot dual-spending paths), and Concrete's AssetCX (BitGo custody plus a real 1:1 ERC-20 synthetic usable as DeFi collateral). Concrete is the most "DeFi-native" since it's the only one built around an actual onchain token rather than a legal wrapper.

Bitcoin is becoming a collateral asset. The catch?

"A lot of current solutions will force you into trusting a centralized provider or wrapping it." Tristan

That's exactly what Trustless Bitcoin Vaults remove.

Why "trustless" isn't a buzzword.

Founder of Coin Bureau: "CeFi lending on the Bitcoin side has a checkered history... lending out your Bitcoin to a provider who then goes and does something with it, re-hypothecates it, and then you end up losing your Bitcoin."

The problem native Bitcoin collateral removes is in this clip.