Circle Adds Aave to Bitcoin-Backed Borrowing in Mint

Circle has added Aave as a supported lending venue in Circle Mint’s Digital Asset-Backed Borrowing product, expanding the options for eligible institutional customers seeking $USDC loans against bitcoin.

In an Oct. 6 announcement, Circle’s $USDC account said “@aave markets are now supported in Circle Mint’s Digital Asset-Backed Borrowing product.” Eligible Circle Mint LLC customers can deposit BTC, mint Circle’s wrapped bitcoin token cirBTC and borrow $USDC through supported third-party markets on Arc or Ethereum, it said.

The addition extends the Morpho-based service The Defiant reported on Sept. 21. Customers gain another lending venue inside Mint, not a loan from Circle’s balance sheet: Circle’s documentation says borrowed $USDC comes from market lenders. Under the product’s terms, customers bear the risk of losing their collateral through protocol-driven liquidation.

Different Collateral Rules

Aave Labs confirmed on Sept. 16 that Aave V4 on Arc had been activated, with cirBTC among its launch reserves. The Mint integration therefore adds access to an existing lending deployment.

Aave’s published Arc launch configuration specified a 78% collateral factor for cirBTC in its Main Spoke, the general-purpose lending market connected to its shared liquidity hub. It also specified a maximum liquidation bonus of 7.22%, with the bonus varying according to the position’s health.

The same launch configuration specified a supply limit, called an Add Cap, of 1,100 cirBTC and a borrowing limit, or Draw Cap, of 220 cirBTC. Those caps apply to the wrapped bitcoin asset itself, not to $USDC loans against it. The Main Spoke’s separately specified $USDC limits were 56 million supplied and 51 million borrowed.

For comparison, the Morpho cirBTC market on Arc carried an 86% liquidation loan-to-value threshold when The Defiant reported on it Sept. 21. At that time, it held $177 million of supplied $USDC and $14.3 million of $USDC borrowings against 287 cirBTC.

The lending venue does not remove the wrapper’s issuer dependencies. In its Sept. 18 assessment, Aave risk service provider LlamaRisk identified concentrated trading liquidity on Arc and Circle-controlled privileged contract roles without timelocks.

Circle’s borrowing terms state that liquidation parameters are determined by the applicable protocol operator “and not by Circle.” Liquidation can occur without notice, and Circle does not guarantee the amount or availability of any residual collateral recovery.