Aave Labs has put forward a governance proposal titled "Custodied Credit Borrowing: Aave V4 Isolated Hub and Spoke," outlining a lending framework built for institutionally custodied assets. Under the proposal, assets such as Bitcoin could remain with regulated custodians including Anchorage Digital Bank while still being used as collateral on Aave V4 through non-transferable onchain Custodied Collateral Tokens, or CoCT. Users would then be able to borrow stablecoins against those positions.
The design would use Chainlink’s CustodySync infrastructure to mint or burn CoCT in real time as balances in custody accounts change, keeping offchain custody records aligned with onchain borrowing positions. Aave said the setup is intended to let large holders access onchain liquidity without moving assets out of regulated custody environments. The proposal is still in the governance discussion stage and has not become a live market. According to Aave, the structure points to a possible next phase for DeFi, where dependable links between custody systems and onchain lending markets could better serve institutional demand.
Aave Labs has submitted a governance proposal called "Custodied Credit Borrowing: Aave V4 Isolated Hub and Spoke" to create dedicated lending markets for institutionally custodied assets.
Under the proposed model, assets including Bitcoin could remain with regulated custodians such as Anchorage Digital Bank while being posted as collateral in Aave V4 through non-transferable onchain Custodied Collateral Tokens, or CoCT. Users would be able to borrow stablecoins against that collateral.
The proposal would use Chainlink’s CustodySync infrastructure to mint or burn CoCT in real time based on changes in custody account balances, keeping offchain custody data synchronized with onchain lending positions. Aave said the design would allow large holders to access onchain liquidity without removing assets from regulated custody environments.
The proposal is still under governance discussion and has not become a formal market. Aave said the architecture suggests a possible next step for DeFi through a reliable bridge between custody systems and onchain lending markets to meet institutional needs.
This article was originally published by Bit.Fan. For more cryptocurrency news and market insights, visit www.bit.fan. Disclaimer:
The market information, project data, and third-party content displayed on this platform are for industry information sharing only and do not constitute any form of investment advice or return commitment.
Cryptocurrency trading carries high risks. Users should fully assess their risk tolerance and make independent decisions. All profits, losses, and legal responsibilities are borne by the users themselves.
