Babylon Labs submitted an October 14 proposal for Aave V4 enabling native Bitcoin as collateral on Ethereum. Borrowers would lock BTC in Taproot vaults, and Aave would draw WBTC from its shared liquidity Hub to settle liquidations with external liquidators immediately. The mechanism offers two liquidation routes: an open circuit through the Swap Spoke funded by Hub liquidity, or a direct circuit through authorized keepers. The potential deficit created by WBTC borrowing is not covered by funded protection in the initial recommendations, which only cover WETH, USDC and USDT markets. Final governance, borrowing limits and risk parameters remain undefined before mainnet deployment.
Source: Read the original article
Disclaimer: this content is for information purposes only and is not financial advice. Cryptocurrencies are highly volatile: you may lose all of your capital. Always do your own research. Legal notice
