Aave Proposal Brings Anchorage-Custodied Bitcoin Into V4 Lending Model

Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure TL;DR Aave Labs has proposed a V4 market built around institutionally custodied collateral. Bitcoin would remain with Anchorage while an on-chain receipt represents the collateral. Chainlink infrastructure would keep custody data synchronized with Aave. Aave Labs is exploring a lending structure that would let institutions borrow on-chain without first moving their Bitcoin out of regulated custody. The proposal, titled “Custodied Collateral Lending: Aave V4 Isolated Hub & Spoke,” would create a new Aave V4 setup designed specifically for assets held with institutional custodians. In the initial model, Bitcoin would remain at Anchorage Digital Bank. The borrower would then receive an on-chain representation of that balance which could be posted into Aave. The Bitcoin Does Not Move Into Aave That is the part that makes the design interesting. Aave is not proposing a standard wrapped-Bitcoin market where BTC is bridged into a token and deposited into a DeFi contract. Instead, the underlying asset stays with Anchorage for the life of the loan. A non-transferable Custodied Collateral ...