Babylon Labs has submitted an ARFC proposal to the Aave community to add native BTC as collateral on Aave V4 through the Trustless Bitcoin Vaults (TBV) protocol. According to Foresight News, the proposal would deploy two new Spokes, Babylon Spoke and BTC Vault Swap Spoke, and make native BTC the only collateral asset on Babylon Spoke.

The proposal’s main use case is borrowing stablecoins against native BTC. Users would lock BTC on the Bitcoin network through Taproot UTXOs without wrapping, cross-chain transfers, or custody, while redemption would be secured by on-chain rules and zero-knowledge proofs.