Community Debates cbBTC Integration Proposal for Aave v3 @aave 🧵 1/7

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2/ ACI has proposed integrating Coinbase's new Bitcoin wrapper, cbBTC, into Aave v3 on Base and Ethereum mainnet. This aims to diversify Bitcoin offerings in DeFi, enhance liquidity, and boost user engagement.

4/ @midapple and @DeFiWhale raise concerns about cbBTC's minting, redemption mechanisms, and regulatory risks. @EzR3aL supports the addition, citing risk management by @ChaosLabs and @LlamaRisk.

5/ @Loganmariot emphasizes the need for BTC diversification, while @MarcZeller and @ACI endorse the proposal for its potential to attract mainstream users and increase liquidity. Key positives include offering an alternative to WBTC and leveraging Coinbase's reputation.

6/ However, concerns include lack of clarity on cbBTC's mechanisms, regulatory risks, and potential liquidity fragmentation. The proposal's next steps involve gathering community feedback before moving to the ARFC snapshot stage and, if positive, an AIP vote for final implementation.

👉 Learn more at https://app.x23.ai/aave/discussions/topic/18988/arfc-onboard-cbbtc-to-aave-v3-on-base-and-mainnet

3/ The proposal includes community feedback, a snapshot vote, and a final AIP vote if successful. $150,000 in incentives from the Aave Merit program are proposed to support this integration over three months. Community reactions are mixed.