Summary
LlamaRisk supports onboarding BTC.b to the Aave V4 Core Hub on Ethereum, conditional on the segregation of BTC custody between Lombard’s BTC.b and LBTC products, which are currently backed by a pooled custody structure. Lombard has confirmed that per-asset custody segregation is planned and is expected to be implemented within the next couple of weeks. While Lombard’s aggregate reserves are sufficient to fully collateralize both products, dedicated custody for BTC.b would ensure that its backing remains independent of LBTC-related exposures.
Beyond the above consideration, BTC.b benefits from robust administrative safeguards. Contract upgrades are subject to a 1-day timelock enforced by LombardTimeLock, with the executor controlled by Lombard’s 3/5 Safe multisig. The Bascule check is also enabled on the Ethereum BTC.b contract, providing an additional layer of verification for mints. The protocol also maintains an active bug bounty program, and recent audits have not identified any critical or high-severity findings. BTC.b currently has approximately $7.9M in DEX liquidity on Ethereum, nearly 100% of which is supplied by the Lombard team. While highly concentrated, this liquidity is relatively stable given its protocol-aligned nature and lower reliance on third-party LPs.
1. Asset Fundamental Characteristics
1.1 Asset
According to the Aave Asset Class Allowlist (AAcA), Cross-chain Bitcoin (BTC.b) is classified as a bridged BTC wrapper, and assets of this category have already been listed on Aave. BTC.b is an ERC20 token on Ethereum, Avalanche, Katana, MegaETH, Monad, and Stable, backed 1:1 by BTC. BTC.b is issued against native BTC deposited on the Bitcoin network and secured through Lombard’s custody infrastructure, with issuance and accounting maintained on the Lombard Ledger. Approximately 2,115 BTC.b ($167M) is currently in circulation, with the majority of the supply residing on Avalanche at 2,012 BTC.b ($159M), while Ethereum accounts for 72.18 BTC.b ($5.7M).
1.2 Architecture
BTC.b is minted primarily against native BTC deposits on the Bitcoin Network, with consortium-notarised proofs confirmed through the Bascule. On Ethereum, the AssetRouter and BridgeV2 hold the only MINTER_ROLE, while the AssetRouter also facilitates BTC.b/LBTC conversions through the Lombard Ledger. BTC.b can be redeemed for native BTC through supported Bitcoin output scripts, subject to a 0.0001 BTC fee, while cross-chain transfers burn BTC.b on the source chain and mint it on the destination chain. There are no on-chain cooldowns or queues, with settlement times determined operationally. On Ethereum, BTC.b-to-BTC redemptions generally settle within hours (1 hour median), while LBTC-to-BTC.b conversions can take days (9.5 days median).
The BTC.b architecture remains unchanged since our prior review in February 2026, except for a reduction in the Security Consortium from 15 to 14 members. The signer threshold remains 10-of-14, with the current consortium comprising Amber, Antpool, Chorus One, DCG, Cubist, f2pool, Figment, Galaxy, Kraken, Kiln, Nansen, OKX, P2P, and Wintermute. The Bascule check on the Ethereum BTC.b contract was enabled on September 1, 2026. Before this, Ethereum mints relied solely on Consortium proofs. On Avalanche, the corresponding Bascule check has been enabled since January 29, 2026.
BTC Reserves
Lombard’s Bitcoin reserves total 10,919.51 BTC across the 29,192 addresses published in its on-chain Proof-of-Reserve (PoR) list. These reserves are sufficient to fully back the outstanding supply of BTC.b and LBTC, with the Chainlink protocol-level PoR feed reporting 10,919.27 BTC, a difference of 0.25 BTC.
| Measure |
BTC |
| Sum of the 29,243 PoR addresses |
10,919.51 |
| Chainlink protocol-level Proof-of-Reserve feed |
10,919.27 |
| Difference |
0.25 (0.002%) |
| BTC.b float (Avalanche, Ethereum, MegaETH, Stable, Katana, Monad) |
2,115.44 BTC |
| LBTC float (Ethereum, Base, Avalanche, BSC, Berachain, Corn, Etherelink, Katana, MegaETH, Monad, Stable, Sonic, Solana, Starknet, Sui, Swell, TAC) |
8,742.84 LBTC |
| LBTC float in BTC terms, at 1.00488299 BTC per LBTC |
8,785.53 BTC |
| LBTC, buffer allocation |
7,436.69 BTC |
| LBTC, active allocation into covered-call mandate (held in tri-party custody) |
1,348.84 BTC |
| Identified issuance |
10,900.97 |
| Reserve in excess of identified issuance |
18.54 (0.17%) |
The aggregate reserve position is therefore adequate, but the key consideration for BTC.b is whether its backing remains economically segregated from LBTC reserves. This became particularly relevant during July and August 2026, when Lombard transitioned LBTC from Babylon staking to a covered-call mandate managed by Bitwise, as seen below.
Source: LlamaRisk, September 14, 2026
Historically, BTC.b and LBTC backing were held in separate addresses, with BTC.b reserves primarily held in bc1qt688…zuke. This address currently holds 8,020.37 BTC, or 73.45% of Lombard’s total reserves, equivalent to approximately 3.85x the entire BTC.b float. It received the consolidated BTC.b reserves during the January 2026 migration to Lombard infrastructure, and its balance subsequently declined in line with BTC.b redemptions. On August 6-7, 2026, it received a further 8,190.60 BTC from Lombard’s operational wallet, materially increasing the concentration of reserves in this address. The current reserve structure is as follows:
| Address |
Grouping |
BTC held |
Share of reserve |
First active |
| bc1qt688…zuke |
Pooled custody |
8,020.37 |
73.45% |
27 January 2026 |
| bc1q5c2h…uvy5 |
New custody (LBTC active sleeve) |
1,297.78 |
11.88% |
6 August 2026 |
| bc1qmcdp…j3gp |
Operational wallet |
1,229.76 |
11.26% |
21 August 2024 |
| bc1pxvj7…xss7 |
Other custody |
55.00 |
0.50% |
9 September 2026 |
| bc1ptere…5juy |
Other custody |
5.00 |
0.05% |
19 August 2026 |
| bc1qm8va…cs63 |
Other custody |
3.19 |
0.03% |
30 July 2025 |
| bc1q5mks…gzk8 |
Other custody |
2.64 |
0.02% |
6 August 2025 |
The concern remains around how the ~2,115 BTC backing BTC.b is allocated across the custody groupings. Lombard currently uses many per-user deposit addresses for each asset alongside four protocol coordination wallets, with BTC.b and LBTC reserves co-mingled across these addresses. While aggregate reserves are sufficient, the PoR does not establish that BTC.b’s backing is segregated from LBTC. If reserves are pooled, a shortfall in LBTC operations could reduce the backing available to BTC.b holders, creating interdependence between the two assets.
We therefore recommend per-asset segregation of the protocol coordination wallets and a clear mapping of BTC.b reserves to dedicated custody addresses that maintain coverage at or above BTC.b supply. This would provide stronger assurance that BTC.b holders have a dedicated reserve pool and preserve BTC.b and LBTC as independent collateral exposures for Aave.
Bridge Risk
Lombard uses Chainlink CCIP to enable cross-chain bridging via a Burn-and-Mint mechanism. The attester set on CCIP comprises a Decentralized Oracle Network (DON) of 16 node operators (the same operator set used by Chainlink’s price feeds), which includes two off-chain plugins: the Commit DON and the Execute DON. The on-chain commit threshold requires 6-of-16 signatures, while the off-chain libOCR consensus protocol requires 11-of-16 operators to agree before a commit report can leave the DON.
The BTC.b bridge has 6 listed networks: Ethereum, Avalanche, Katana, MegaETH, Monad, and Stable. The CCIP bridge implements a 50 BTC.b 24h token bucket capacity for every active pathway, as shown below.
Source: LlamaRisk, September 14, 2026
1.3 Tokenomics
The total supply of BTC.b is variable and expands or contracts based on user-driven bridging of native BTC. On Ethereum, the circulating supply currently stands at 72.18 BTC.b, held across just 283 unique addresses.
In contrast, the majority of BTC.b supply resides on Avalanche, with approximately 2,011.89 BTC.b outstanding. Smaller allocations exist on other networks, including Monad, MegaETH, Stable, and Katana, bringing the aggregate cross-chain supply to ~2,115 BTC.b.
1.3.1 Token Holder Concentration
Source: BTC.b Top 100 Token Holders, Etherscan, September 14, 2026
The top holders of BTC.b are:
The top three holders collectively control 98.05% of BTC.b’s total supply on Ethereum, with 92.14% held on Uniswap V4 and Aave V3 Core.
2. Market Risk
2.1 Liquidity
Source: DeFiLlama, September 14, 2026
Users can swap 51.5 BTC.b for ~$3.77M USDC within a price impact of 7.5%.
2.1.1 Liquidity Venue Concentration
Source: LlamaRisk, September 14, 2026
On-chain liquidity for BTC.b on Ethereum is concentrated in a Uniswap V4 BTC.b/cbBTC pool ($7.89M TVL). As this is a dual-BTC wrapper pool, BTC.b-to-stablecoin swaps ultimately depend on the depth and liquidity of cbBTC’s secondary markets.
2.1.2 DEX LP Concentration
BTC.b liquidity on Ethereum is highly concentrated, with the Lombard team accounting for nearly all DEX liquidity. Lombard BTC Vault is the primary supplier to the Uniswap V4 BTC.b/cbBTC pool, contributing nearly 100% of the pool’s liquidity. While this represents near-exclusive reliance on a single liquidity provider, the provider is protocol-aligned, reducing the likelihood of rapid liquidity outflows and supporting the stability of the pool’s available liquidity.
2.2 Volatility
Source: GeckoTerminal, September 14, 2026
BTC.b has consistently maintained its 1:1 peg to BTC across secondary markets over the past month. Since the pool was seeded with 100 BTC of cbBTC liquidity on August 12, 2026, it has subsequently attracted trading activity, supporting healthy price discovery and overall trading dynamics.
2.3 Exchanges
BTC.b is exclusively traded on DEXs and is not currently listed on any centralized exchange.
2.4 Growth
Source: LlamaRisk, September 14, 2026
Since its deployment on Ethereum, BTC.b has experienced steady growth, reaching a peak circulating supply of approximately 150 in August 2026. As of September 14, the circulating supply on Ethereum stands at 72.18 BTC.b ($5.45M).
3. Technological Risk
The BTC.b technological risk on Ethereum, including smart contract risk, bug bounty program, and dependency risk, remains unchanged since our prior review and is excluded here for brevity, as no new contracts have been deployed.
4. Counterparty Risk
4.1 Governance and Regulatory Risk
The regulatory risk has been previously discussed in detail as part of the BTC.b Aave V3 Core onboarding review. As there have been no material changes, that assessment remains applicable here.
4.2 Access Control Risk
4.2.1 Contract Modification Options
Here are the wallets controlling BTC.b on Ethereum:
- LombardTimeLock: Admin and owner of the BTC.b, AssetRouter, BridgeV2, and LombardConsortium contracts.
- Multisig1: Lombard-controlled 3/5 Safe, holds executor/proposer/canceller roles of the LombardTimeLock contract and can pause the BTC.b contract.
The following contracts power the BTC.b architecture on Ethereum:
- BTC.b: Upgradeable ERC20 contract for the BTC.b token controlled by LombardTimeLock.
- AssetRouter: Upgradeable contract, handles deposit/redemption orchestration and fee accounting, owned by LombardTimeLock.
- BridgeV2: Upgradeable contract, handles bridge execution for burn-and-mint transfers, owned by LombardTimeLock.
- LombardConsortium: Upgradeable contract, epoch-weighted multi-signature verifier, owned by LombardTimeLock.
A role-based access control mechanism is employed for BTC.b to manage sensitive functions:
| Controlling Addresses |
Role |
Functionality |
| LombardTimeLock |
DEFAULT_ADMIN_ROLE |
Can grant/revoke any role |
| BridgeV2, AssetRouter |
MINTER_ROLE |
Can mint BTC.b |
| Multisig1, Multisig2 |
PAUSER_ROLE |
Can pause the contract |
| EOA 1 |
OPERATOR_ROLE |
Manages configuration parameters and executes operational tasks |
| EOA 1 |
CLAIMER_ROLE |
Watches BTC deposits, consortium proofs, and submits mint+fee transactions on the user’s behalf |
4.2.2 Timelock Duration and Function
A 1-day (86400 seconds) delay has been implemented for BTC.b contract upgrades via the LombardTimeLock.
4.2.3 Multisig Threshold / Signer identity
Lombard controlled Multisig1 (3/5 Safe) holds is the executor of the LombardTimeLock contract, which has the following role-based access control:
| Controlling Addresses |
Role |
Functionality |
| LombardTimeLock |
ROLE_ADMIN |
Can update roles, including the role admin role itself |
| Multisig1 |
EXECUTOR_ROLE |
Can execute all proposals, including role updates |
| EOA 2, Multisig1 |
PROPOSER_ROLE |
Can schedule proposals, but can not schedule role updates |
| Multisig1 |
CANCELLER_ROLE |
Can unschedule proposals, but can not unschedule role updates |
The 3/5 Safe Multisig1 has the following signers:
- 0xd7B78BF124eB327F23f75F5C49De0c3fa5d2265A
- 0x116744098070508c080B120A555B5453422b66eF
- 0x70B9b04b19D9015EfBe1db37BBe30Dd304737950
- 0xd775959eb15f6DfF24A267f988F6c2E2f769DeDa
- 0xDD48B7cfd0c2256E008B7C690Fbe47ca77CD6071
Disclaimer
This review was independently prepared by LlamaRisk, a DeFi risk service provider funded in part by the Aave DAO. LlamaRisk is not directly affiliated with the protocol(s) reviewed in this assessment and did not receive any compensation from the protocol(s) or their affiliated entities for this work.
The information provided should not be construed as legal, financial, tax, or professional advice.
