The Aave community is currently considering supporting Coinbase's upcoming Bitcoin wrapper, cbBTC, in its V3 protocol. The proposal, put forth by the Aave Chan Initiative (ACI), suggests linking cbBTC to both the Base network and Ethereum mainnet. To incentivize adoption and bootstrap liquidity, the plan includes a $150,000 incentive package spread over three months, funded by the Aave Merit program.

Supporters argue that it could attract more mainstream users to Aave, potentially driving growth and adoption of the platform. "This synergy between a major centralized exchange and a leading DeFi protocol could contribute to the overall growth and adoption of the platform," the proposal states.

However, the community's reaction has been mixed, with some members expressing significant concerns. One of the primary issues raised is the potential introduction of a single point of failure if cbBTC is primarily held in custody by Coinbase.

Community members are also concerned about the security, calling for thorough audits of the cbBTC smart contracts before any integration takes place. Furthermore, partnering with a U.S.-regulated entity like Coinbase adds further complications to the DeFi protocol.

The proposal comes at a time when Aave is actively expanding its offerings to adapt to the evolving DeFi landscape. Recently, the protocol activated a new Aave v3 market focused on wrapped Ethereum (weETH) and stablecoin liquidity, including assets like USDC, PYUSD, and FRAX, addressing the growing demand for weETH as collateral.