Babylon, which is a decentralized Bitcoin protocol that enables native Bitcoin lending and staking, has received 15 million dollars in funding through a16z’s sale of Babylon native BABY.BABYTokens) to Andreessen Horowitz’s digital assets arm.
A blog post Published on Wednesday, A16z Crypto stated that the funds will be used to continue developing the Bitcoin-native protocol infrastructure.
“Bitcoin’s limited programmability” Bitcoins have been left in large quantities (BTCThe blog states that BTC has been sitting inactive, and that by allowing its use for collateral, it could be a significant source of Onchain capital, which would allow BTC function as an asset productive within Decentralized Finance (DeFi).
Babylon Labs, founded in 2022 as a Bitcoin stake protocol by David Tse & Fisher Yu is building a Bitcoin native system of trustless Vaults. This allows BTC be used for collateral to onchain lending and remain on the Bitcoin Network.
Babylon is closed in December partnered Aave Labs will bring Bitcoin-backed native lending to Aave V4, Aave’s newest lending architecture. Babylon aims to build a dedicated Bitcoin lending service. “Bitcoin-backed Spoke” BTC may be used to secure other assets without the need for wrappers or custodians.
In April 2026, a launch of a jointly developed product is planned.
BABY was up sharply in value on Wednesday. CoinGecko reported that the price of BABY at this time had risen by about 5%.
Related: Blockrise wins Dutch MiCA license, brings Bitcoin-backed loans to EU businesses
Bitcoin lending evolves in 2025
Many blamed crypto-backed lending for the escalation of the crisis. 2022 FTX collapseAs transparent balance sheets rehypothecation and excessive leverage As token prices fall, the price of each coin is also falling.
However, in 2025 this sector will return, but with a restrained approach. The lenders will place more emphasis on full collateralization as well stricter handling practices and risk control.
In January, Coinbase reintroduced Bitcoin-backed loans in the United StatesUsers outside New York can borrow USDC up to $100,000 (USDCThe platform will allow you to exchange BTC (held on it) for BTC. Morpho Labs facilitates the loans, which are executed by Base on Coinbase’s Ethereum Layer-2 network.
In March, Xapo Bank launched Bitcoin-backed US dollar loansThe bank offers a product that allows clients with BTC to borrow as much as $1,000,000 against their BTC. The bank designed the product to appeal to long-term Bitcoin owners who are looking for liquidity but don’t want sell their Bitcoins. They also stressed that all collateral was held at MPC and would not be rehypothecated.
Meanwhile, digital asset lender Ledn The company moved in May to a Bitcoin only, fully collateralized loan model. The company’s revised structure states that client Bitcoin used for collateral will be kept in custody, and not loaned or reused.
Ledn founder Mauricio Bartolomeo said to Cointelegraph, in June of this year that Bitcoin users are using BTC-backed lending more and more. finance real estate purchasesThey can access liquid funds while avoiding taxes on capital gains.
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Source: cointelegraph.com
