Native Bitcoin-backed borrowing is now live on public testnet through Aave V4 and Babylon’s Trustless Bitcoin Vaults, bringing BTC collateral closer to DeFi lending without wrapped tokens, bridges or custodians. The Aave testnet update and Babylon announcement mark the latest step toward native Bitcoin-backed credit markets. Users can post BTC as collateral and borrow against it while the underlying Bitcoin remains locked on the Bitcoin network instead of being wrapped into a custodial asset first.