Aave DAO Faces Vote on Native BTC Collateral as Babylon Labs Files Temp Check
The mechanism works through scripts on . A depositor locks onchain inside a unspent transaction output ( ). That lock creates a corresponding vault record on Ethereum. Because Aave V4 only accepts 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 integrations adapter contract. No other transfers are permitted. Babylon Labs co-founded the project in 2022 with Professor David Tse of Stanford and Dr. Fisher Yu. Since its ( ) protocol launched in August 2024, it has activated more than 100,000 cumulatively and currently holds approximately 51,000 , valued near $4 billion, in active stakes. Investors backing the project include A16z, Paradigm, and Polychain, with total funding exceeding $100 million. The underlying cryptography driving Trustless 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. The research reduces the cost of SNARK proof verification on by roughly 1,000 times compared to prior approaches, making the fraud-proof challenge window economically viable at scale. When a users position is liquidated, a permissionless liquidator swaps the seized vault for WBTC