Aave is considering integrating its V3 protocol with Spiderchain, a Bitcoin-based layer-two network by Botanix Labs.
The collaboration aims to combine Bitcoin’s security with Ethereum’s programmability for decentralized financial services.
Aave Explores Partnership with Botanix Labs
The governance proposal, which was authored by ACI, is designed to integrate Aave V3 with Spiderchain, a layer two (L2) network on Bitcoin that is compatible with the Ethereum Virtual Machine (EVM) and was developed by Botanix Labs.
The L2 solution aims to integrate the programmability of Ethereum with the security of Bitcoin, providing a decentralized platform for applications such as trading, borrowing, and lending.
Spiderchain is distinguished by its utilization of decentralized multi-signature wallets, a proof-of-stake (PoS) consensus model, and minimal transaction costs, which average $0.01.
Botanix Labs asserts that it has achieved considerable community engagement, with more than 60,000 active participants and substantial liquidity commitments for its forthcoming mainnet launch.
The project’s team is of the opinion that Spiderchain offers a decentralized synthetic representation of bitcoin, which is intended to reduce counterparty risk in bundled bitcoin derivatives. This is particularly noteworthy.
The proposal notes that the deployment could improve Aave’s liquidity options and attract a new user base of bitcoin holders who are interested in generating a yield through defi if it is approved.
The proposal delineates a number of advantages of the integration, such as the potential to diversify Aave’s bitcoin-based assets and the early mover advantage within the burgeoning decentralized finance (defi) sector of Bitcoin.
The proposal also specifies that Botanix Labs has pledged to incorporate Aave’s native stablecoin, GHO, into the Spiderchain ecosystem.
Aave DAO could generate additional revenue from interest payments by permitting users to borrow against BTC collateral with GHO. The proposal outlines a phased approach that commences with community feedback during the current “temp check” phase.
The subsequent stages involve the publication of a more detailed technical proposal and, if successful, the deployment of Aave V3 on Spiderchain’s mainnet.
Botanix Labs has committed to collaborating with Aave’s development and risk management teams, with a focus on security and compatibility.
The objective is to guarantee that operations are conducted smoothly at the time of commencement, with an initial liquidity commitment of approximately $20 million in bitcoin.
It will be determined whether this proposition advances to a formal vote by the community’s response. Proponents contend that the move has the potential to establish Aave as a leader in Bitcoin-aligned defi by capitalizing on Spiderchain’s inventive features and performance.
