A major step toward bringing native Bitcoin into DeFi could be on the horizon.
@BabylonLabs_io has proposed integrating its Trustless Bitcoin Vaults (TBV) with Aave V4, allowing users to use native BTC as collateral without wrapping tokens or relying on bridges. Instead, BTC stays secured on the Bitcoin network in Taproot-based vaults while a transfer-restricted representation, vaultBTC, is used within Aave's lending markets.
If approved, users could borrow assets against their Bitcoin while maintaining self-custody. Withdrawals are protected through zero-knowledge (ZK) proofs and a fraud-proof challenge period, adding another layer of security.
The proposal also introduces two specialized Aave V4 Spokes:
🔸 Core Lending Spoke – Enables BTC-backed borrowing.
🔸 BTC Vault Swap Spoke – Handles post-liquidation settlement.
With over 100,000 BTC in cumulative deposits processed and around 51,000 BTC currently staked, Babylon continues pushing toward a future where Bitcoin can participate in DeFi without leaving the Bitcoin network.
If this proposal moves forward, it could become one of the biggest milestones for trustless Bitcoin lending.
#baby $BABY
@BabylonLabs_io has proposed integrating its Trustless Bitcoin Vaults (TBV) with Aave V4, allowing users to use native BTC as collateral without wrapping tokens or relying on bridges. Instead, BTC stays secured on the Bitcoin network in Taproot-based vaults while a transfer-restricted representation, vaultBTC, is used within Aave's lending markets.
If approved, users could borrow assets against their Bitcoin while maintaining self-custody. Withdrawals are protected through zero-knowledge (ZK) proofs and a fraud-proof challenge period, adding another layer of security.
The proposal also introduces two specialized Aave V4 Spokes:
🔸 Core Lending Spoke – Enables BTC-backed borrowing.
🔸 BTC Vault Swap Spoke – Handles post-liquidation settlement.
With over 100,000 BTC in cumulative deposits processed and around 51,000 BTC currently staked, Babylon continues pushing toward a future where Bitcoin can participate in DeFi without leaving the Bitcoin network.
If this proposal moves forward, it could become one of the biggest milestones for trustless Bitcoin lending.
#baby $BABY
