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Today at 04:11:38 PM |
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Bitcoin’s lending landscape is undoubtedly being reformed, and we’ve experienced a significant deviation from the approach it began with, where borrowing and lending solely depended on additional arrangements, platforms or smart-contract systems, each introducing risks that holding or transferring BTC directly does not necessarily involve.
With self-custody and Bitcoin lending becoming a well-explored theme, with protocols such as Babylon Vaults already exerting their influence in facilitating self-sovereignty, we’re having a dimension of privacy on Bitcoin being paved open that would’ve been considered unprecedented at the start. The main difference that non-custodial options like Babylon bring to lending, which differs from that of centralised options like Nevo and Ledn, is who controls the Bitcoin, where the collateral is held, and what mechanism enforces the loan.
Aave DAO’s entry into the landscape also emphasises how far the space has come, with its ARFC set to onboard native Bitcoin (BTC) collateral on Aave V4, which was voted unanimously in favour, with a proposed framework set to position the collateral factor and interest fees on borrowed assets as competitive with those for other wrapped assets (WBTC and cbBTC) on the Aave V4 Core Spoke while negating the need to wrap or rely on tri-party agreements.
These are frameworks that keep getting buttressed to practically give holders true ownership keys, a far cry from what centralisation offered.
I’d like to hear your thoughts, though. How impactful do you think the ongoing pivot of Bitcoin towards self-custody will be on trust and involvement in the long term?
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