A new opportunity for AAVE—not just adding another type of collateral
I recently came across a new Aave V4 proposal that plans to support borrowing against native BTC using Babylon technology.
In the past, BTC holders who wanted to participate in DeFi lending and borrowing usually had to first use assets like WBTC or cbBTC.
If people can borrow directly against native BTC in the future, it could attract funds from people who haven’t entered the DeFi lending market before.
But I think the real question isn’t whether another type of collateral is being added.
It’s how many BTC holders will actually want to borrow, and how much revenue those loans will ultimately generate for the protocol.
After all, adding more collateral doesn’t necessarily mean there will be more demand for loans.
Also, using native BTC as collateral doesn’t mean there are no technical or liquidation risks.
For now, this is still at the governance discussion stage, and there’s a lot to validate before it can be implemented and generate revenue.
For AAVE, I’m more interested in whether it can turn this new collateral into genuine demand for loans, rather than simply growing its TVL.
#AAVE #DeFi #BTC
I recently came across a new Aave V4 proposal that plans to support borrowing against native BTC using Babylon technology.
In the past, BTC holders who wanted to participate in DeFi lending and borrowing usually had to first use assets like WBTC or cbBTC.
If people can borrow directly against native BTC in the future, it could attract funds from people who haven’t entered the DeFi lending market before.
But I think the real question isn’t whether another type of collateral is being added.
It’s how many BTC holders will actually want to borrow, and how much revenue those loans will ultimately generate for the protocol.
After all, adding more collateral doesn’t necessarily mean there will be more demand for loans.
Also, using native BTC as collateral doesn’t mean there are no technical or liquidation risks.
For now, this is still at the governance discussion stage, and there’s a lot to validate before it can be implemented and generate revenue.
For AAVE, I’m more interested in whether it can turn this new collateral into genuine demand for loans, rather than simply growing its TVL.
#AAVE #DeFi #BTC