CUSTODIED COLLATERAL LENDING: AAVE V4 ISOLATED HUB & SPOKE

Summary from the TLDR Crypto newsletter

Aave Labs proposed a new Aave V4 Isolated Hub and Spoke that lets institutional borrowers use assets custodied at Anchorage as collateral for onchain stablecoin loans without moving them onchain. The custodied balance is represented by a non-transferable Custodied Collateral Token (CoCT), minted and burned exclusively by a Chainlink-built CustodySync contract that reconciles custody state with onchain state each cycle, and keeps the position independently verifiable by both sides. Liquidation runs as an OTC sale executed by Anchorage, with proceeds settling the onchain debt atomically in a single transaction that repays, withdraws, and burns the CoCT. The proposal is fully isolated from existing Aave markets, sets the CoCT draw cap to zero permanently so custodied collateral can never be borrowed out of the Hub, and initially lists one CoCT instance backed by BTC held in Anchorage custody, with risk parameters to follow from the DAO's risk providers before an AIP vote.