Aave Labs said it supports Babylon’s proposal to onboard native Bitcoin as collateral on Aave V4, following months of work on the trustless Bitcoin vault integration. The team said its review found the design operates as intended with Aave V4 and preserves the trust assumptions of the protocol’s canonical Spoke architecture.
The proposal would allow a Bitcoin-backed market tied to Babylon’s infrastructure, while Aave Labs said risk parameter decisions should follow LlamaRisk’s recommendations. The integration is still moving through security procedures, and audit findings are expected to be published once that process is finished.
Review and risk stance
According to Aave Labs, it has worked closely with the Babylon team over the past several months as the integration moved toward launch. During that process, Aave Labs said it answered questions around Aave V4 features, reviewed how the design fits into the protocol, and checked whether the proposed setup meets Aave’s internal quality standards.
The team said that review concluded the integration functions correctly with Aave V4, keeps the trust assumptions of the canonical Spoke intact, and includes the security and risk controls needed for a more complex use case. On the question of actual market parameters, however, Aave Labs said it defers to LlamaRisk and supports that firm’s recommendations.
How governance would work
Aave Labs said the two new spokes described in Babylon’s post would be governed by the DAO under the same governance approach used across other Aave instances. As part of the protocol’s hardening process, the Protocol Security Council would remain the owner for now.
The post also noted that risk stewards are under consideration, indicating that the final oversight structure around this market may still be evolving as the launch process continues.
Security reviews are still underway
The Babylon-specific contracts tied to the integration are currently being audited and reviewed by Aave Labs. The security process includes two internal review rounds using both manual analysis and AI tooling, along with independent reviews by an external security researcher.
Aave Labs also said Certora is involved in the review process through a combination of manual review and formal verification. The team said the resulting reports will be released after the security procedures are complete, meaning the public record on the codebase is not yet final.
Interface and developer support at launch
In the first version of the rollout, Aave Pro users are expected to be able to see the Babylon market and their positions directly in the Aave Pro interface. For transactions, users would be redirected through deep links to Babylon’s own interface rather than executing those actions entirely inside Aave Pro.
Aave Pro is also set to add an Integrations page for supported third-party products. For developers and integrators, Aave Labs said access to this market will go through Babylon’s adapter contracts, and the Aave SDK will not support market actions at launch. Instead, Babylon said support for the integration is available through its own SDK in the Babylon Toolkit repository.
Next step: documentation and community feedback
Aave Labs said liquidations in this market will not follow the same pattern as other Aave V4 markets. Because of that, the team said dedicated documentation for liquidators and integrators will be published separately, with more detail to come in a follow-up reply.
For now, the proposal remains in the feedback stage. The immediate next confirmed steps are the completion of the security review process, publication of audit materials, and additional technical guidance on how this market’s liquidation flow will work.
Source: governance.aave.com