Aave DAO

This proposal, a 'Temperature Check,' asks the Aave DAO community if it wants to integrate Babylon's Trustless Bitcoin Vaults (TBV) protocol into Aave V4. If approved, this would allow users to use native Bitcoin (BTC) as collateral for loans on Aave without needing to wrap, bridge, or use custodians. The integration would involve deploying two new Aave V4 'Spokes' (Babylon Core Lending Spoke and BTC Vault Swap Spoke) to facilitate this process. Babylon is a project backed by significant venture capital, known for its trustless Bitcoin staking protocol.

This proposal is a preliminary check to gauge community interest in deploying Aave V4, a new version of the Aave lending protocol, on the Avalanche blockchain. It highlights that Avalanche has committed up to $15 million in incentives to support this deployment, contingent on Aave V4 achieving certain growth targets. The plan also includes a dedicated hub for Real World Assets (RWAs) on Avalanche, aiming to expand Aave's institutional offerings.