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 opened an Aave Request for Comment, or ARFC, proposing a separate Hub-and-Spoke market on Aave V4 for institutions that want to borrow stablecoins against assets held with Anchorage. Under the design, the collateral would remain with the custodian rather than moving into Aave or Chainlink. Chainlink CustodySync would mirror custody balances on-chain and mint a non-transferable collateral receipt token known as CoCT, short for Custodied Collateral Token. Borrowing, repayment and liquidation would run through dedicated contracts built for this market structure. In liquidation, the custodian would sell the collateral off-chain first and then settle the debt on-chain. The proposal says the setup would not affect Aave’s existing markets or reserves. The first planned asset is a CoCT backed by custodied Bitcoin. Risk parameters, capacity limits and interest rates have not been set yet and still need review by risk service providers. The proposal would also need Snapshot approval and later on-chain governance approval before any deployment can take place.

Aave Labs published an ARFC on the Aave governance forum on Sept. 14, asking for approval to deploy a new Aave V4 Isolated Hub and Spoke structure. The proposal is designed to let institutionally custodied collateral be used to back stablecoin borrowing on Aave. Under the setup, institutional borrowers would keep collateral with Anchorage for the full life of the loan, while on-chain balances would be represented by non-transferable custody collateral tokens, or CoCT, minted and burned by Chainlink-designed CustodySync. Borrowers would stake CoCT on the Spoke and draw stablecoins from the Isolated Hub. The proposal says synchronization between the custodian and Aave, including liquidation events across the loan lifecycle, would run through Chainlink infrastructure. Its scope is limited to a single Isolated Hub and a single Spoke governed by Aave DAO, with no changes to existing hubs, spokes, or reserves. The initial launch plan covers one CoCT tied to BTC held in custody by Anchorage, before the process moves from ARFC discussion to Snapshot and then a final AIP if supported.