As Michigan Blockchain, we support onboarding tBTC on Aave V3 on Arbitrum. Adding support for tBTC on Aave v3 (Arbitrum) as an asset would allow tBTC holders to obtain a yield on their tBTC holdings. tBTC is a better alternative for DeFi users than other forms of wrapped Bitcoin like WBTC (which is heavily centralized), as holding tBTC is a way to permissionlessly borrow and lend BTC in a decentralized way. Currently, the tBTC supply on Arbitrum is only 83.8, however, since WBTC is currently the only form of wrapped BTC on the Aave V3 Arbitrum instance, tBTC does not have competition outside WBTC which certain users don’t prefer using because of its centralized nature, which means tBTC supply on the Arbitrum instance is expected to increase as there is increased demand for it as a result of Aave integration.
DEX liquidity is sufficient, and liquidity is not heavily concentrated in a single pool, which is ideal.
Top tBTC pools on Arbitrum, DefiLlama
With tBTC’s proven success on Aave Prime instance (surpassing 2,200 BTC TVL rapidly), this integration would offer a low-risk and high impact upside for Arbitrum’s ecosystem. By onboarding tBTC on Arbitrum, Aave can attract Bitcoin-native capital and also cement its role as a leader in decentralized cross-chain finance.
After a steady decline since October, the supply has plateaued on Arbitrum for the last one month.This is proof that there is still user interest in holding tBTC on Arbitrum. Again, we think that Aave integration will drive DeFi demand for tBTC which will increase its supply.
tBTC Arbitrum Supply as of 6 March 2025, Dune
tBTC on Arbitrum is only about 2% of the total tBTC supply across all chains. Considering Arbitrum TVL is 5% of the Ethereum TVL, tBTC market share on Arbitrum is expected to grow more when there is Aave integration.
We recommend to use a BTC/USD Chainlink feed, as there has been significant deviations in price from BTC on DEXs.
-Kerem Dillice and nsks