On November 9, the Aave DAO passed the ARFC proposal with 100% approval, which will enable native Bitcoin as collateral on Aave V4 through Babylon Trustless Bitcoin Vaults (TBV).
Bitcoin holders can lock their native BTC in self-custody and lend out assets such as USDT and USDC without the need for encapsulation, cross-chain bridges, or third-party custody protocols. The integrated collateral ratio and lending rate are comparable to encapsulated assets such as WBTC and cbBTC on Aave V4 Core Spoke. Aave DAO will share the related revenue with Babylon and will use a portion of it to buy back AAVE and BABY.
The next step will be the final AIP phase to activate the integration on the Ethereum mainnet.