Aave DAO approved an ARFC proposal on November 9 to support native BTC as collateral in Aave V4 through Babylon’s Trustless Bitcoin Vaults, according to a Babylon post cited by Foresight News. The proposal received 100% support.
The report was published on November 9, 2026, at 22:37:50 UTC+8. Approval was not a mainnet launch: the proposal was next due to enter the AIP stage, with mainnet deployment targeted for the end of 2026.
The proposed BTC-to-borrowing route
Under the proposal, bitcoin holders would lock native BTC in self-custodial Bitcoin vaults and borrow assets such as USDT and USDC against it. Babylon described this route as requiring neither wrapped BTC nor a cross-chain transfer of the bitcoin.
The reported collateral ratio for native BTC is 78%, with a 0% risk premium. Liquidity would come primarily from the Aave Core Hub, with an initial stablecoin credit line of approximately $21 million, increasing gradually thereafter.
“Trustless Bitcoin Vaults” is Babylon’s name for the infrastructure. The supplied report does not explain the verification mechanism or how the Bitcoin vault position would be recognized and enforced within Aave V4, so it does not establish the route’s technical trust assumptions.
Revenue sharing and token buybacks
For each 12-month period after the integration goes live, Aave DAO would retain the first $500,000 in revenue. Revenue above that threshold would be split between Aave, Babylon and a token-buyback fund under a tiered schedule.
The report specifies two tiers:
| Annual revenue portion | Aave | Babylon | Buyback fund |
|---|---|---|---|
| $500,000–$2 million | 78% | 18% | 4% |
| Above $6 million | 61.5% | 31.5% | 7% |
It does not specify the allocation for the intervening revenue tiers. Of the buyback fund, 85% would be used to repurchase AAVE and 15% to repurchase BABY.
The planned rollout would proceed in phases, initially limiting both participation and scale.
