Aave V4 integration with Babylon Protocol brings native Bitcoin lending

Aave has integrated Babylon Protocol to enable native Bitcoin lending without relying on wrapped Bitcoin (wBTC) custodians, effectively eliminating depegging risks. This move aligns with an industry trend that seeks to enhance Bitcoin’s utility in decentralized finance (DeFi) by offering direct integration into DeFi platforms. Currently, approximately $15 billion worth of Bitcoin is used in DeFi through wrapped tokens, but Babylon aims to unlock the potential of $1.4 trillion in actual Bitcoin. If successful, capturing just 5% of this newly accessible Bitcoin could inject $70 billion into Aave, generating an estimated $366 million in new annual revenue.

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