{"id":73060,"date":"2026-05-25T21:14:57","date_gmt":"2026-05-25T21:14:57","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/aave-dao-faces-vote-on-native-btc-collateral-as-babylon-labs-files-temp-check\/"},"modified":"2026-05-25T21:14:57","modified_gmt":"2026-05-25T21:14:57","slug":"aave-dao-faces-vote-on-native-btc-collateral-as-babylon-labs-files-temp-check","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/aave-dao-faces-vote-on-native-btc-collateral-as-babylon-labs-files-temp-check\/","title":{"rendered":"Aave DAO Faces Vote on Native BTC Collateral as Babylon Labs Files Temp Check"},"content":{"rendered":"<p><b>(Originally posted on : Bitcoin News )<\/b><br \/>\n<\/p>\n<div>\n<div class=\"@container mb-[25px] rounded-sm overflow-clip py-0.5 pr-0.5 pl-2.5 bg-success-100\">\n<div class=\"flex flex-col gap-m overflow-clip rounded-[6px] !bg-success-10 p-3 @[420px]:p-m\">\n<h2 class=\"m-0 flex items-center gap-s text-[19px] !text-[#1c1c1c] md:text-[20px]\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"16\" height=\"10\" viewbox=\"0 0 16 10\" fill=\"none\" class=\"shrink-0 text-success-100\" aria-hidden=\"true\"><path d=\"M1 1.5h14\" stroke=\"currentColor\" stroke-width=\"2.5\" stroke-linecap=\"round\"\/><path d=\"M1 8.5h10\" stroke=\"currentColor\" stroke-width=\"2.5\" stroke-linecap=\"round\"\/><\/svg><span>Key Takeaways<\/span><\/h2>\n<ul class=\"m-0 flex list-none flex-col gap-m pl-0\">\n<li class=\"m-0 flex items-start gap-s !text-[#434248]\"><span class=\"mt-2 size-2 shrink-0 rounded-full bg-success-100\" aria-hidden=\"true\"\/><span class=\"text-body\">Babylon Labs filed a May 25 Temp Check asking Aave DAO to accept native BTC collateral via Trustless Bitcoin Vaults on Aave V4.<\/span><\/li>\n<li class=\"m-0 flex items-start gap-s !text-[#434248]\"><span class=\"mt-2 size-2 shrink-0 rounded-full bg-success-100\" aria-hidden=\"true\"\/><span class=\"text-body\">The BTC Vault Swap Spoke targets Aave\u2019s $5B WBTC supply, currently underused on the borrow side, to drive new demand.<\/span><\/li>\n<li class=\"m-0 flex items-start gap-s !text-[#434248]\"><span class=\"mt-2 size-2 shrink-0 rounded-full bg-success-100\" aria-hidden=\"true\"\/><span class=\"text-body\">If the Temperature Check passes, Babylon Labs advances to ARFC review, with audits by Coinspect, Sherlock, and Zellic ongoing.<\/span><\/li>\n<\/ul>\n<\/div>\n<\/div>\n<h2> <span>BTC<\/span> Holders Could Borrow on Aave V4 Without Bridges if Babylon Labs Vote Passes<\/h2>\n<p>The <a href=\"https:\/\/governance.aave.com\/t\/temp-check-babylon-trustless-btc-vault-integration-on-aave-v4\/24964\" target=\"_blank\" rel=\"noopener noreferrer\">proposal<\/a> calls for deploying two new Aave V4 Spokes on Ethereum Mainnet. The first, the Babylon Core Lending Spoke, lets <span>BTC<\/span> holders borrow supported assets such as <span>stablecoins<\/span> and wrapped <span>BTC<\/span> against their native <span>bitcoin<\/span> collateral. The second, the <span>BTC<\/span> Vault Swap Spoke, handles post- <span>liquidation<\/span> settlement by converting seized <span>BTC<\/span> collateral into WBTC for permissionless liquidators.<\/p>\n<figure id=\"attachment_817148\" aria-describedby=\"caption-attachment-817148\" style=\"width:1376px\" class=\"wp-caption aligncenter\"><figcaption id=\"caption-attachment-817148\" class=\"wp-caption-text\">Aave posting about the Temp Check on X.<\/figcaption><\/figure>\n<p>The mechanism works through <span>Taproot<\/span> scripts on <span>Bitcoin<\/span>. A depositor locks <span>BTC<\/span> onchain inside a <span>Taproot<\/span> unspent transaction output ( <span>UTXO<\/span>). That lock creates a corresponding vault record on Ethereum.<\/p>\n<p>Because Aave V4 only accepts <span>ERC-20 tokens<\/span> as collateral, adapter contracts represent each vault record one-to-one as a transfer-restricted token called vaultBTC. The token can only move between the Aave V4 Hub, the Babylon Core Spoke, and the integration\u2019s adapter contract. No other transfers are permitted.<\/p>\n<p>Babylon Labs co-founded the project in 2022 with Professor David Tse of Stanford and Dr. Fisher Yu. Since its <span>bitcoin<\/span> ( <span>BTC<\/span>) <span>staking<\/span> protocol launched in August 2024, it has activated more than 100,000 <span>BTC<\/span> cumulatively and currently holds approximately 51,000 <span>BTC<\/span>, valued near $4 billion, in active stakes.<\/p>\n<p>Investors backing the project include <a href=\"https:\/\/news.bitcoin.com\/a16z-linked-wallets-hype-sixth-largest-holder-hyperliquid-2026\/\">A16z<\/a>, Paradigm, and Polychain, with total funding exceeding $100 million. The underlying cryptography driving Trustless <span>Bitcoin<\/span> Vaults comes from BaBe, a peer-reviewed paper co-developed by Babylon Labs and UC Berkeley, set to appear at CCS 2026, according to the Temp Check.<\/p>\n<p>The research reduces the cost of SNARK proof verification on <span>Bitcoin<\/span> by roughly 1,000 times compared to prior approaches, making the fraud-proof challenge window economically viable at scale. When a user\u2019s <span>BTC<\/span> position is liquidated, a permissionless liquidator swaps the seized vault for WBTC at a small premium. A separate set of permissioned arbitrageurs then purchase those escrowed vaults, repay the WBTC debt, and redeem the underlying <span>BTC<\/span> natively on <span>Bitcoin<\/span>.<\/p>\n<p>The structure decouples <span>liquidation<\/span> timing from <span>BTC<\/span> redemption, allowing liquidators to settle immediately while the BTC-side process runs on its own timeline. The proposal also targets WBTC utilization on Aave. The platform currently holds roughly $5 billion in WBTC supply, which Babylon Labs described as underutilized on the borrow side.<\/p>\n<p>Routing <span>liquidation<\/span> settlements through WBTC is designed to generate new borrowing demand for that asset. Aave <span>DAO<\/span> retains full control over all risk parameters, supply caps, borrow caps, and governance oversight across both Spokes. The Temperature Check focuses on integration architecture. Risk parameters, <span>oracle<\/span> configuration, and full trust-assumption details are expected in a follow-up Aave Request for Comment.<\/p>\n<p>Security reviews are currently underway with Coinspect, Sherlock, Zellic, ABDK, and ZK Security across the protocol stack, as detailed by Babylon Labs. Formal verification is being conducted by Runtime Verification.<\/p>\n<p>If the Temperature Check snapshot shows positive community sentiment, the proposal advances to the ARFC stage for further risk evaluation and audit review. A successful ARFC snapshot moves it to an onchain AIP vote for final governance approval.<\/p>\n<p>Babylon Labs stated it was not compensated by any third party to publish the proposal.<\/p>\n<h2>Community Response Leans Positive<\/h2>\n<p>The integration, if approved, would give <span>BTC<\/span> holders a direct path to <span>decentralized finance<\/span> ( <span>DeFi<\/span>) borrowing without handing custody to a bridge, signer consortium, or threshold-signature group. Other projects building BTC-collateralized products could also layer on top of the primitive, extending the reach of native <span>BTC<\/span> into broader <a href=\"http:\/\/www.bitcoin.com\/get-started\/what-is-defi-decentralized-finance\/\" class=\"lar_link lar_link_outgoing\" target=\"_blank\" rel=\"noopener noreferrer\">DeFi<\/a> activity.<\/p>\n<p>Early community response to the governance thread has been broadly supportive. Aave Labs Technical Service Provider Simo <a href=\"https:\/\/governance.aave.com\/t\/temp-check-babylon-trustless-btc-vault-integration-on-aave-v4\/24964\/2\" target=\"_blank\" rel=\"noopener noreferrer\">noted<\/a> the integration aligns with Aave V4\u2019s Hub-and-Spoke design and that routing post- <a href=\"http:\/\/www.bitcoin.com\/get-started\/understanding-liquidation-on-perp-dex\/\" class=\"lar_link lar_link_outgoing\" target=\"_blank\" rel=\"noopener noreferrer\">liquidation<\/a> settlements through WBTC would generate meaningful borrow demand for an asset already heavily supplied on the platform.<\/p>\n<p>Aave founder Stani Kulechov backed the Temperature Check directly, <a href=\"https:\/\/governance.aave.com\/t\/temp-check-babylon-trustless-btc-vault-integration-on-aave-v4\/24964\/3\" target=\"_blank\" rel=\"noopener noreferrer\">citing<\/a> enthusiasm for the V4 Spoke ecosystem gaining real <a href=\"https:\/\/www.binance.com\/en\/price\/bitcoin\" class=\"lar_link lar_link_outgoing\" target=\"_blank\" rel=\"noopener noreferrer\">bitcoin<\/a> collateral. Contributor Nicopei added an institutional angle, pointing out that keeping <a href=\"https:\/\/www.binance.com\/en\/price\/bitcoin\/\" class=\"lar_link lar_link_outgoing\" target=\"_blank\" rel=\"noopener noreferrer\">BTC<\/a> native while offering predictable borrowing costs addresses the two requirements most commonly cited by institutional borrowers who currently rely on off-chain solutions.<\/p>\n<\/p><\/div>\n<p><a href=\"https:\/\/news.bitcoin.com\/aave-dao-faces-vote-on-native-btc-collateral-as-babylon-labs-files-temp-check\/\">Source link <\/a><br \/>\n<br \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(Originally posted on : Bitcoin News ) Key Takeaways Babylon Labs filed a May 25 Temp Check asking Aave DAO to accept native BTC collateral via Trustless Bitcoin Vaults on Aave V4. The BTC Vault Swap Spoke targets Aave\u2019s $5B WBTC supply, currently underused on the borrow side, to drive new demand. If the Temperature [&hellip;]<\/p>\n","protected":false},"author":19,"featured_media":73061,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[32],"tags":[],"_links":{"self":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/73060"}],"collection":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/comments?post=73060"}],"version-history":[{"count":0,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/73060\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media\/73061"}],"wp:attachment":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media?parent=73060"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/categories?post=73060"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/tags?post=73060"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}