Aave DAO has proposed a governance initiative to integrate native Bitcoin lending into Aave V4 through the Babylon protocol. This move aims to allow users to borrow and lend using native BTC as collateral, eliminating the need for wrapped BTC or centralized custodial solutions. The proposal, now on the Aave Governance Forum, seeks approval to incorporate Babylon's native BTC into the V4 lending protocol. The initiative highlights Bitcoin's status as the largest crypto collateral base, noting that current on-chain BTC lending often relies on wrapped BTC or custodial intermediaries. Aave V4 plans to utilize Babylon's staking and validation infrastructure to offer a direct native Bitcoin lending mechanism, aiming to unify fragmented Bitcoin collateral lending into a single protocol.