Aave Proposes Native Bitcoin Collateral Without Wrapped Tokens or Custodians
Babylon Labs advances a plan to enable BTC-backed loans on Aave V4 using Trustless Bitcoin Vaults.
Babylon Labs advances a plan to enable BTC-backed loans on Aave V4 using Trustless Bitcoin Vaults. Bitcoin (BTC) is trading at $81,108.00. This is an original TLT brief based on reporting by NewsBTC, with live market data added, as of Sun, 18 Oct 2026 17:15:01 UTC.
This development could significantly expand Aave's Total Value Locked by attracting Bitcoin holders to use their BTC as collateral without intermediaries, potentially reshaping DeFi lending dynamics.
- Babylon Labs proposes using Trustless Bitcoin Vaults for BTC-backed loans on Aave V4.
- The design avoids wrapped BTC and central custodians, using Taproot-based arrangements.
- Aave's TVL is $17.83B, while Babylon's TVL is $3.32B.
- Babylon Proposes Native Bitcoin Lending on Aave V4
- Aave Proposes Native Bitcoin Collateral Without Wrapped Tokens or Custodians — this brief
Babylon Labs has submitted a proposal to integrate native 
Bitcoin collateral into 
Aave V4, allowing users to borrow against their BTC without converting it to wrapped tokens or relying on custodians. The proposal, which was posted on Aave's governance forum on October 14, builds on previous discussions and a temperature check.
The proposed system uses Trustless Bitcoin Vaults, where users lock their BTC in a Taproot-based arrangement on the Bitcoin network. Aave V4 then records restricted collateral units within a dedicated lending market. These units are not intended to circulate like traditional wrapped Bitcoin.
The development comes as Aave's Total Value Locked (TVL) stands at $17.83 billion, according to DeFiLlama, marking a 3.2% decrease over the past week. Babylon's TVL is $3.32 billion, having declined by 1.6% over the same period.
The proposal aims to attract Bitcoin holders to use their assets as collateral for loans on Aave, potentially increasing the platform's liquidity and user base. The design's reliance on Taproot and the absence of intermediaries could appeal to users seeking greater security and decentralization.
The broader crypto market remains relatively stable, with a total market cap of $2.78 trillion. Bitcoin is currently priced at $81,062, down 0.32% in the last 24 hours, while Aave has fallen 1.91% to $149.55. The Fear & Greed Index remains at 53, indicating a neutral sentiment.
Since this brief published about 1 hour ago, Bitcoin (BTC) has moved from $81,062.00 to $81,108.00 — +0.06%.
The chart plots BTC's price: grey is the move before this brief published, the vertical dashed line marks the moment it published, the horizontal dashed line is the price then, and the coloured area is the move since — from TLT's market data (daily resolution). It shows what happened after the news, not that the news caused it; many factors move prices. Not financial advice.
Will Bitcoin dip to $80,000 October 12-18?
Crowd-implied probability on Polymarket, $98.48K 24h volume, resolves Oct 19 — snapshotted when this brief published (Oct 18 16:05 UTC). A market price reflects what traders collectively expect; it is not a forecast by TLT and will have moved since. View the market ↗
At today's peer-to-peer rate, 1 BTC ≈ ₦110.72M (about $81,108.00), down 0.1% over 24 hours. The naira itself trades about 2.5% above the official rate on the P2P market, so a Nigerian buyer's effective cost differs from the headline dollar price.
Live market data
Current prices for the assets in this story — live, source-stamped, updated every 15 minutes.
Figures and sectors in this story, checked live against on-chain aggregators · October 18, 2026.
TLT reads these figures directly from on-chain aggregators (DeFiLlama, mempool.space) at build time — independent of what any outlet reported. Sector totals aggregate every protocol DeFiLlama tracks in that category. Values are live and will change.
Aave Proposes Native Bitcoin Collateral Without Wrapped Toke — questions & answers
What is the main innovation in Babylon Labs' proposal?
The proposal introduces Trustless Bitcoin Vaults, allowing BTC-backed loans without wrapped tokens or custodians.
How does the proposal affect Aave's current system?
It expands Aave's collateral options by enabling native Bitcoin collateral, potentially increasing its TVL and user base.
What is the current status of the proposal?
The proposal is under community review and requires governance votes before implementation.
How much is 1 Bitcoin worth in naira today?
About ₦110.72M at the live peer-to-peer (P2P) USDT rate, which is what Nigerians typically trade at — equivalent to roughly $81,108.00. The naira price moves with both BTC's US-dollar price and the USDT/NGN rate; use our Bitcoin in naira page for any amount.
Has Bitcoin's price moved since this brief was published?
BTC is up 0.06% since this brief first published — trading at $81,108.00 now versus $81,062.00 at publication. TLT re-checks this figure against CoinGecko and Binance every 15 minutes.
Which outlets reported this story?
This is an original TLT brief that synthesises reporting from NewsBTC. It is not a copy of any one article — follow the source links above for the original reporting.
Original summary — not financial advice. This is an original TLT brief that summarises a development reported elsewhere and adds live market data for context; it is not the original article and reproduces no part of it. Follow the source link above for full details. Crypto is volatile and high-risk — always do your own research.