Within the framework of the Aave forum to integrate native Bitcoin lending into the future Aave V4 version, Babylon presented its governance proposal. The initiative, publicly endorsed by Aave founder Stani Kulechov, seeks to activate the more than $4 billion in BTC deposited in Babylon as collateral within the Ethereum DeFi ecosystem.
Babylon Labs submitted a Temp Check to Aave DAO to integrate Trustless Bitcoin Vaults with Aave V4.
This would allow native BTC as collateral and introduce two new V4 Spokes, one for borrowing against BTC and one for post-liquidation settlement. https://t.co/pBEHybatYd
— Aave (@aave) May 25, 2026
The core of this development lies in the total elimination of bridges, centralized intermediaries, and traditional wrapped tokens like Wrapped BTC (WBTC). Utilizing Taproot scripts and zero-knowledge proofs (ZKP) through Trustless Bitcoin Vaults, users will be able to lock their real Bitcoin directly on the BTC mainnet, while receiving the non-transferable accounting asset vaultBTC to operate and borrow securely on Ethereum natively.
This integration will be structured through Aave V4’s modular Hub-and-Spoke architecture, using two specific “Spokes” to manage collateral and mitigate liquidation risks. Currently, the project is in the community discussion phase and will require rigorous technical audits before its final on-chain voting.
Source: https://x.com/aave/status/2058953979300569399
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