Source: CryptoNewsNet
Original Title: Babylon’s Trustless Vaults to Add Native Bitcoin-Backed Lending Through Aave
Original Link:
Bitcoin staking project Babylon has teamed up with the largest decentralized lending protocol Aave, allowing BTC to be used directly as collateral without wrapping or centralized custody.
Beyond lending, Babylon is also preparing to extend its vault design into decentralized finance (DeFi) insurance, allowing BTC to serve as collateral for coverage against protocol hacks. BTC would be deposited into insurance pools and earn yield if no payouts occur, while providing liquidity for claims when hacks happen.
That initiative is in development and expected to be announced by January 2026.
Babylon and Aave team up to reshape BTC lending
Although BTC-backed lending has become a multibillion-dollar sector, much of that activity relies on custodial models, whereby users are given a tokenized version of the bitcoin. Even the largest of these — Wrapped Bitcoin (WBTC) — constitutes far less than 1% of bitcoin’s total market cap, a key limitation for DeFi protocols hungry for deeper liquidity.
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FlashLoanPhantom
· 15h ago
BTC is used directly as collateral, without wrapping? Bro, this is a big move. Is Aave going all in on Bitcoin now?
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MysteryBoxAddict
· 12-03 13:05
Now BTC can finally be used directly as collateral, no need to mess around with those wrapped tokens anymore—much more convenient.
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SillyWhale
· 12-03 13:03
BTC can be used directly as collateral without wrapping? Now Aave is truly unbeatable, this collaboration with Babylon is really something.
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ChainWanderingPoet
· 12-03 13:02
Directly using BTC as collateral without wrapping it is really convenient... This collaboration between Babylon and Aave is truly bringing Bitcoin into DeFi.
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BankruptcyArtist
· 12-03 13:00
Ha, finally someone integrated Bitcoin into lending, but it's Aave again. This big brother really is monopolizing everything.
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CascadingDipBuyer
· 12-03 12:59
Can BT be used directly as collateral on Aave? This is great, finally no need to get sliced by the wrapped version anymore.
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BlockchainDecoder
· 12-03 12:52
According to research, this solution does indeed address a long-standing issue from a technical perspective—the liquidity dilemma following native BTC staking. Notably, the fact that it doesn't require cross-chain bridges or wrapped tokens significantly reduces the attack surface from a systemic risk standpoint, which is a remarkable engineering advancement.
Babylon's Trustless Vaults to Add Native Bitcoin-Backed Lending Through Aave
Source: CryptoNewsNet Original Title: Babylon’s Trustless Vaults to Add Native Bitcoin-Backed Lending Through Aave Original Link: Bitcoin staking project Babylon has teamed up with the largest decentralized lending protocol Aave, allowing BTC to be used directly as collateral without wrapping or centralized custody.
Beyond lending, Babylon is also preparing to extend its vault design into decentralized finance (DeFi) insurance, allowing BTC to serve as collateral for coverage against protocol hacks. BTC would be deposited into insurance pools and earn yield if no payouts occur, while providing liquidity for claims when hacks happen.
That initiative is in development and expected to be announced by January 2026.
Babylon and Aave team up to reshape BTC lending
Although BTC-backed lending has become a multibillion-dollar sector, much of that activity relies on custodial models, whereby users are given a tokenized version of the bitcoin. Even the largest of these — Wrapped Bitcoin (WBTC) — constitutes far less than 1% of bitcoin’s total market cap, a key limitation for DeFi protocols hungry for deeper liquidity.