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Babylon, a decentralized protocol focused connected enabling autochthonal Bitcoin staking and lending, received $15 cardinal successful backing from a16z Crypto done the merchantability of Babylon's autochthonal BABY (BABY) tokens to the integer plus limb of Andreessen Horowitz.
In a blog post published Wednesday, a16z Crypto said the backing volition enactment continued improvement of the protocol’s Bitcoin-native infrastructure.
“Bitcoin’s constricted programmability” has near ample amounts of Bitcoin (BTC) sitting idle, the blog reads, arguing that enabling its usage arsenic collateral could unlock a large root of onchain superior and let BTC to relation arsenic a productive plus wrong decentralized concern (DeFi).
Founded arsenic a Bitcoin staking protocol successful 2022 by David Tse and Fisher Yu, Babylon Labs is processing a Bitcoin-native strategy of trustless vaults that allows BTC to beryllium utilized arsenic collateral successful onchain lending portion remaining connected the Bitcoin web and nether the user’s control.
In December, Babylon partnered with Aave Labs to bring autochthonal Bitcoin-backed lending to Aave V4, Aave’s latest lending architecture, with Babylon aiming to physique a dedicated “Bitcoin-backed Spoke” that allows BTC to beryllium utilized arsenic collateral without wrappers oregon custodians.
The integration is expected to participate investigating successful the archetypal 4th of 2026, with a associated merchandise motorboat targeted for April 2026.
BABY roseate sharply connected Wednesday and was up astir 5% astatine clip of writing, according to CoinGecko data.
Source: CoinGeckoRelated: Blockrise wins Dutch MiCA license, brings Bitcoin-backed loans to EU businesses
Bitcoin lending evolves successful 2025
Crypto-backed lending was wide blamed for magnifying the fallout of the 2022 FTX collapse, arsenic opaque equilibrium sheets, rehypothecation and excessive leverage unraveled alongside falling token prices.
In 2025, however, the assemblage is resurfacing successful a much restrained form, with lenders emphasizing afloat collateralization, stricter custody practices and tighter hazard controls.
In January, Coinbase reintroduced Bitcoin-backed loans successful the United States, allowing eligible users extracurricular New York to get up to $100,000 successful USDC (USDC) against BTC held connected the platform. The loans are facilitated by Morpho Labs and executed connected Base, Coinbase’s Ethereum layer-2 network.
In March, Xapo Bank launched Bitcoin-backed US dollar loans, enabling eligible clients to get up to $1 cardinal against BTC holdings. The slope positioned the merchandise for semipermanent Bitcoin holders seeking liquidity without selling, stressing that collateral is held successful organization MPC custody and not rehypothecated.
Meanwhile, digital plus lender Ledn moved to a afloat collateralized, Bitcoin-only lending exemplary successful May. Under its revised structure, the institution said lawsuit Bitcoin utilized arsenic collateral volition stay successful custody and volition not beryllium loaned retired oregon reused to make yield.
Ledn co-founder Mauricio Di Bartolomeo told Cointelegraph successful June that Bitcoin holders are besides progressively utilizing BTC-backed loans to finance existent property purchases, allowing them to entree liquidity portion typically avoiding superior gains taxes.
Magazine: How crypto laws changed successful 2025 — and however they’ll alteration successful 2026
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