Aave, the world's largest liquidity protocol, just added support for Threshold Network’s decentralized Bitcoin bridge, tBTC. The integration of tBTC on the Aave protocol represents a key milestone in Threshold’s mission to deliver scalable, decentralized Bitcoin access to the broader DeFi ecosystem.
The unexpected changes to WBTC’s custody model by BitGo, which left DeFi protocols scrambling to adapt, serve as a reminder of the need for greater decentralization in Bitcoin’s integration with DeFi. By embracing a more decentralized alternative through tBTC and strengthening governance collaboration with Aave, both networks can avoid similar risks in the future.
In light of the listing milestone, Threshold has proposed that Aave be onboarded to the Threshold Network to run a tBTC node and join the Threshold Council to help govern tBTC. These changes aim to align the two protocols and establish a safe and reliable end-to-end Bitcoin lending process.
The proposal includes delegating 40 million T, Threshold's governance token, to an operator node run by Aave Chan Initiative on behalf of the Aave DAO. This would allow Aave to participate in tBTC’s network validation process. Furthermore, the proposal nominates Aave to join the Threshold Council, an essential body responsible for overseeing the secure governance of tBTC. The Council, tasked with vetoing malicious proposals, is critical in maintaining the protocol's security and decentralization. As a trusted DAO, Aave would help safeguard the long-term viability and security of tBTC.
Threshold already has trusted DeFi protocols involved in the tBTC minting process, including Yearn, Curve, Synthetix, Euler, Alchemix, and Connext. The Aave Chan Initiative has been an active tBTC minter since early 2023 and is well-positioned to take on a more significant role in running a node for the Aave DAO. With Aave onboarded as a tBTC node operator and Threshold Council member, they will be able to help guide the future direction of tBTC. Aave will be able to help ensure that tBTC continues to provide a secure and reliable way to use Bitcoin in decentralized lending and the broader DeFi ecosystem.
Aave Chan Initiative founder Mark Zeller stated:
“At Aave we've always supported curated diversity to our users. As an example, we currently provide 5 different liquid staking/restaking options. Our goal is to provide diversity and support decentralisation while maintaining the highest quality standard of our industry. We are supportive of the inclusion of tBTC as a new option for the Bitcoin community in Aave. We believe tBTC will have a natural market fit and an audience looking for the most decentralised option we offer.”
If approved by Threshold token holders, Aave’s involvement in Threshold governance will help accelerate the unprecedented opportunity to bring decentralized finance to Bitcoin by further distinguishing tBTC from centralized alternatives as permissionless, decentralized, open-source, and entirely transparent.
About Threshold Network
The Threshold Network offers a full suite of decentralized threshold cryptography services that eliminate the need to trust middlemen. Threshold connects Bitcoin to DeFi with tBTC, enables permissionless borrowing against BTC and ETH with its stablecoin thUSD, and provides developers with sophisticated access control mechanisms with TACo (Threshold Access Control).
By staking and running decentralized nodes Threshold Network's token holders power a one-stop platform for threshold cryptographic services that distribute operations across a network of independent nodes. Node operators are crypto-economically incentivized to provide these services without any central authority.
