Babylon Labs has proposed a new integration for Aave V4 to enable native Bitcoin collateralized lending without using wrapped BTC or custodial structures. The proposal, submitted to the Aave Governance Forum, suggests users lock BTC directly on the Bitcoin network and borrow assets via Aave V4 on Ethereum. This system utilizes Babylon's Trustless Bitcoin Vaults (TBV) and Taproot-based vault scripts, ensuring BTC remains on the Bitcoin network. Aave founder Stani Kulechov has endorsed the proposal, highlighting its potential to introduce over $4 billion in staked BTC into the Aave ecosystem as collateral. The integration plan includes two customized Aave V4 Spokes, with a focus on minimizing trust dependencies and avoiding cross-chain bridges. The proposal is currently under community review and will require further auditing and voting before implementation.