Circle adds Aave to Bitcoin-backed borrowing service for Mint clients
Circle has expanded its Bitcoin-backed borrowing service, Circle Mint, by adding Aave as a lending option. This move follows the initial launch of the product, called Digital Asset-Backed Borrowing (DABB), which debuted on September 21, 2026. DABB allows eligible institutional clients to borrow USDC against their Bitcoin without parting with it. The service operates by having clients deposit Bitcoin with Circle, which then mints a 1:1 token called cirBTC backed by Bitcoin reserves.
The cirBTC token serves as collateral in third-party lending markets, with Circle acting as the custodian. Borrowing rates and liquidity are determined by these protocols, and positions are managed in smart wallets controlled by clients. The service is currently unavailable to customers based in New York, limiting its reach.
Initially, DABB operated exclusively with Morpho on Circle's Arc blockchain. Early data showed strong demand, with nearly $18.86 million borrowed against a liquidity pool of $157.85 million. The liquidation threshold was set at 86%, meaning loans become eligible for liquidation once they reach this value relative to the Bitcoin backing them. By October 2, 2026, Morpho deposits on Arc had surpassed $500 million, with the cirBTC/USDC market driving most of the activity.
The addition of Aave introduces competition between lending protocols. Previously, Morpho had the cirBTC market to itself, but now borrowers and lenders can choose between two protocols. Circle's role is limited to custodianship and token issuance, while lending outcomes depend on the rules of the third-party protocols. The New York exclusion remains a significant limitation, as it excludes some of the largest US financial institutions from the service.