According to LlamaRisk’s October 23 pre-listing assessment, Babylon Labs’ proposed direct liquidation route for Aave V4 would still depend on WBTC whenever liquidation fees or compensation to the borrower were due. Even though the direct route allowed an authorized keeper to finance a liquidation outside the shared liquidity pool, a loan denominated in WBTC had to be repaid in WBTC, while debts in other assets were repaid in their respective reserve tokens. The application liquidation fee, set at 0.5% of liquidation-bonus profit, and any borrower-surplus payment were denominated in WBTC and funded by the caller. As of October 25, Babylon’s published addresses still referred to Sepolia testnet deployments rather than Ethereum mainnet. LlamaRisk recommended an initial rollout with 10 allowlisted borrowers and 50 vaults, alongside a 100 WBTC credit line for BTCVaultSwap and a 300 BTC collateral cap.
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