Babylon wants Aave users to borrow against Bitcoin

Babylon Labs has submitted a new governance proposal on October 14, 2026, to allow Bitcoin holders to borrow stablecoins through Aave V4 without selling their BTC, moving their coins to another blockchain, or handing them to a custodian. Summary Babylon submitted an Aave V4 proposal allowing Bitcoin holders to borrow stablecoins against native BTC. Users would lock Bitcoin directly on its blockchain without depositing coins with third party custodians. Aave DAO would receive the first $500,000 in annual qualifying revenue under the proposed agreement. The integration requires further governance approval, finalized risk settings, and security checks before any launch. Babylon proposes two dedicated Aave V4 components to manage Bitcoin collateral, borrowing, and liquidation procedures. Babylon Labs published the proposal on Aave’s governance forum, advancing an integration first discussed in May. The plan would introduce two dedicated components for Bitcoin backed borrowing and loan liquidations. The integration still requires community approval, finalized lending risk settings, and further security checks before launch. Babylon proposes Bitcoin lending without wrapping BTC The propo...