The “Custodied Collateral Lending: Aave V4 Isolated Hub & Spoke” ARFC was posted to the Aave Governance Forum by Aave Labs on September 14, 2026.
Its initial focus is Bitcoin held by Anchorage.
Under the proposal, institutions could borrow stablecoins against that Bitcoin without depositing the underlying collateral into an onchain Aave market. The collateral would remain in institutional custody offchain, while a separate token would represent each borrower’s custodied balance for an isolated onchain Aave lending position.
Anchorage-held Bitcoin would back an isolated Aave V4 market
The proposed market is intended for institutional stablecoin borrowing against institutionally custodied collateral. CoinDesk reported that it would use Aave V4’s hub-and-spoke structure as an isolated lending arrangement, separate from Aave’s existing permissionless markets.
According to the governance proposal, the Bitcoin collateral would remain offchain and would not be held by Aave, Chainlink or CustodySync. The underlying collateral would remain with Anchorage rather than being supplied to a public onchain pool, while the borrowing position would be represented and settled through the isolated Aave V4 market.
The proposal remains subject to Aave DAO governance approval, CoinDesk reported.
CustodySync would mirror balances with non-transferable CoCTs
CustodySync would provide the proposed connection between offchain custody records and an isolated Aave V4 lending market. Developed with Chainlink infrastructure, it would represent each borrower’s custodied balance through a non-transferable Custodied Collateral Token (CoCT).
Anchorage would hold the Bitcoin; Aave V4 would host the stablecoin borrowing position; and CustodySync would update the CoCT as the relevant custody balance changed.
The CoCT would be minted and burned as that balance changed. It would not move the underlying Bitcoin into the protocol, but would give the Aave position an onchain representation of collateral while the asset remained outside the custody of Aave, Chainlink and CustodySync.
Because the token would correspond to a particular borrower’s custodied balance, it is intended to remain non-transferable rather than circulate independently as a transferable asset.
Anchorage would execute collateral sales
Liquidation would also depart from the public onchain auction model used in many crypto lending systems. If a position needed to be liquidated, Anchorage would conduct an over-the-counter sale of the underlying collateral, with the proceeds used to settle the associated onchain Aave position.
The custody arrangement would cover both the underlying collateral and the sale process, with the custodian conducting the Bitcoin sale instead of onchain liquidators acquiring collateral in a public auction. Proceeds would then be directed toward settlement of the Aave loan.
Anchorage’s existing Atlas documentation describes a collateral-management service for institutional crypto-secured transactions that includes segregated custody, automated loan-to-value monitoring, margin calls and liquidation coordination. Those stated capabilities align with the operational roles outlined in the Aave proposal, particularly the custody, monitoring and liquidation components.
The ARFC’s next meaningful test is governance. If approved, the proposal would establish an Aave V4 model in which Bitcoin remains at Anchorage throughout the collateral lifecycle, including an OTC liquidation, while a non-transferable onchain representation supports the isolated stablecoin borrowing position.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Source: Crypto Daily