Aave Proposes Institutional-Grade Lending Feature for V4 Protocol

Aave is proposing a new feature for its V4 protocol called Custodied Collateral Lending, which would allow institutions to borrow against Bitcoin held at Anchorage without moving it on-chain.

The proposed system would utilize Chainlink's CustodySync and isolated Hub-and-Spoke markets. This means that the borrowed Bitcoin would remain in custody with Anchorage, while still being used as collateral for loans.

Aave is taking a cautious approach by noting that investments in digital assets can be risky, and institutions should carefully evaluate their risk tolerance before participating in Custodied Collateral Lending.