Babylon advances native Bitcoin collateral plan for Aave V4

Babylon Labs is pushing forward a plan to let people borrow on Aave V4 using Bitcoin that never leaves the Bitcoin network. The pitch is simple. Your BTC stays put, you borrow against it, and nobody has to hold your coins for you. The catch, as with most things in DeFi governance, is that the paperwork isn’t finished. Risk parameters still need to be set, and more Aave DAO votes are required before anything goes live on mainnet. How the setup actually works The proposal is built on Babylon’s Trustless Bitcoin Vaults protocol, or TBV. Instead of wrapping BTC into a token on another chain, TBV locks the coins in self-custodial Taproot UTXOs on Bitcoin itself. Think of it as a safe deposit box with programmable rules. The box sits on Bitcoin, and the rules decide when the contents can move. Those rules are enforced through Taproot scripts and zero-knowledge proofs. Put plainly, cryptography plays the role a custodian normally would, and no third party ever holds the keys. On the Aave side, deposits show up through an internal accounting unit called vaultBTC. It acts as a verifiable record of the BTC sitting in vaults, which Aave can then treat as collateral. The integration leans on A...