Aave Proposes Bitcoin-Backed Loans Using Anchorage Custody
Aave has proposed an innovative institutional lending solution that utilizes Anchorage custody to provide Bitcoin-backed loans. The proposal, posted on September 14, 2026, aims to cater to institutions seeking stablecoin borrowing against their custodied collateral.
The proposed market would use Aave V4's hub-and-spoke structure as an isolated lending arrangement, separate from the existing permissionless markets. This means that the Bitcoin collateral would remain offchain and not be held by Aave, Chainlink, or CustodySync.
Anchorage would hold the underlying Bitcoin, while Aave V4 would host the stablecoin borrowing position. CustodySync would provide the connection between offchain custody records and the isolated Aave V4 lending market, using non-transferable CoCTs to represent each borrower's custodied balance.
In case of liquidation, Anchorage would conduct an over-the-counter sale of the underlying collateral, with the proceeds used to settle the associated onchain Aave position. This arrangement would cover both the underlying collateral and the sale process, aligning with Anchorage's existing Atlas documentation for institutional crypto-secured transactions.