Aave Labs has formally posted an ARFC titled 'Custodied Collateral Lending: Aave V4 Isolated Hub & Spoke' on the Aave Governance Forum on September 14, 2026. The proposal introduces a new institutional borrowing model focused initially on Bitcoin held in custody at Anchorage.
Under the proposed framework, eligible institutions could borrow stablecoins against their Bitcoin without supplying the underlying BTC to an onchain Aave pool. Instead, the collateral would remain offchain with Anchorage, while CustodySync—built with Chainlink infrastructure—would mint a non-transferable Custodied Collateral Token (CoCT) representing each borrower’s custodied balance. That CoCT would back an isolated Aave V4 lending position using the protocol’s hub-and-spoke structure, separate from existing permissionless markets.
The design explicitly keeps underlying Bitcoin outside the custody of Aave, Chainlink and CustodySync. If a borrowing position needs to be liquidated, Anchorage would conduct an over-the-counter sale of the collateral, with proceeds used to settle the onchain Aave position, rather than relying on public onchain auctions.
The proposal remains subject to Aave DAO governance approval. Aave’s announcement signals a push toward more compliant, institution-friendly DeFi lending and follows Anchorage’s existing Atlas documentation, which describes segregated custody, automated loan-to-value monitoring, margin calls and liquidation coordination.
If approved, the initiative could set a precedent for offchain custody-based collateral in decentralized lending, potentially boosting institutional participation in DeFi and drawing more attention to Aave, Bitcoin as collateral, and Chainlink’s role in synchronization.
