#baby $BABY @BabylonLabs_io
Every lending protocol I have ever seen fail collapsed the same way, not because the collateral was bad but because the price feed lied for a few critical seconds. Terra, Mango, half the smaller exploits from the last few years, the story is almost always an oracle problem dressed up as something else.
That is the question I keep coming back to with Trustless Bitcoin Vaults (TBV). TBV lets native BTC be posted as collateral without wrapping, with native Bitcoin-backed borrowing through Aave v4 live on public testnet right now. Removing the wrapping step and the bridge custodian genuinely removes two real attack surfaces. It does not remove a third one, the BTC price oracle that decides when a position gets liquidated.
Native BTC does not live on Ethereum natively, so somewhere in this system a price feed has to translate Bitcoin market conditions into a number Aave v4 can act on. Whatever secures that feed becomes just as important as the vault logic itself, maybe more so, since a bad price update can trigger liquidations even when the actual collateral is perfectly fine.
Trustless collateral still needs a trusted price, and that part of the design has not been the headline yet.
Every lending protocol I have ever seen fail collapsed the same way, not because the collateral was bad but because the price feed lied for a few critical seconds. Terra, Mango, half the smaller exploits from the last few years, the story is almost always an oracle problem dressed up as something else.
That is the question I keep coming back to with Trustless Bitcoin Vaults (TBV). TBV lets native BTC be posted as collateral without wrapping, with native Bitcoin-backed borrowing through Aave v4 live on public testnet right now. Removing the wrapping step and the bridge custodian genuinely removes two real attack surfaces. It does not remove a third one, the BTC price oracle that decides when a position gets liquidated.
Native BTC does not live on Ethereum natively, so somewhere in this system a price feed has to translate Bitcoin market conditions into a number Aave v4 can act on. Whatever secures that feed becomes just as important as the vault logic itself, maybe more so, since a bad price update can trigger liquidations even when the actual collateral is perfectly fine.
Trustless collateral still needs a trusted price, and that part of the design has not been the headline yet.