Aave DAO Supports Native BTC as Collateral for Aave V4 through Proposal

On November 9, Aave DAO passed the ARFC proposal with 100% approval, which will support native BTC as collateral for Aave V4 through Babylon. Bitcoin holders can self-custody and lock native BTC in the Bitcoin vault to borrow assets like USDT and USDC without the need for wrapping or cross-chain transactions. The collateralization rate for native BTC is 78%, with a risk premium of 0%. Liquidity will primarily come from the Aave Core Hub, with an initial stablecoin credit limit of approximately $21 million, which will gradually increase. In terms of revenue distribution, after integration goes live, Aave DAO will retain the first $500,000 in revenue within each 12-month period, with any excess shared with Babylon. A portion of the revenue will be allocated for token buybacks on a tiered basis: for annual revenues between $500,000 and $2 million, the distribution will be 78% to Aave, 18% to Babylon, and 4% to the buyback fund; for revenues above $6 million, the distribution will be 61.5%, 31.5%, and 7%, respectively. 85% and 15% of the buyback fund will be used to repurchase AAVE and BABY tokens, respectively. The next step for this proposal will be to enter the AIP phase, with the mainnet targeted for launch by the end of 2026, initially limiting the number of participants and scale, and rolling out in phases.