- Babylon raised $15 million via a token sale to the digital asset arm of Andreessen Horowitz, funded by a16z Crypto.
- The funding will accelerate development of Babylon’s Bitcoin-native staking and lending infrastructure.
- “Bitcoin’s limited programmability” is cited as a reason to enable BTC use as onchain collateral.
- Babylon is partnering with Aave Labs to build a native, custodian-free Bitcoin-backed lending spoke, with testing planned in Q1 2026 and a target launch in April 2026.
- The move arrives as Bitcoin-backed lending resurfaces in 2025 with more conservative, fully collateralized products from firms like Coinbase, Xapo Bank, and Ledn.
Babylon secured $15 million through the sale of its native BABY token to the digital asset arm of Andreessen Horowitz, a deal backed by a16z Crypto, which said the funds will support further development of Bitcoin-native infrastructure, according to an a16z Crypto blog post. The protocol was founded in 2022 by David Tse and Fisher Yu to enable native Bitcoin staking and lending while keeping BTC on the Bitcoin network under user control.
Babylon is building trustless vaults that let BTC act as onchain collateral without wrappers or custodians. In December, the project partnered with Aave Labs to develop a dedicated “Bitcoin-backed Spoke” for Aave V4. Testing of the integration is expected in the first quarter of 2026, with a joint product launch targeted for April 2026.
Market response was immediate: the BABY token climbed, trading about 5% higher at the time of reporting, per CoinGecko data. Backers say enabling BTC to serve as collateral could unlock large pools of onchain capital that currently sit idle due to what they call “Bitcoin’s limited programmability”.
The funding comes as Bitcoin-backed lending regained traction in 2025 under stricter terms. Coinbase reintroduced BTC-backed loans in the U.S. for eligible users outside New York, offering up to $100,000 in USDC facilitated by Morpho Labs and executed on Base. Xapo Bank launched USD loans secured by BTC up to $1 million, holding collateral in institutional MPC custody without rehypothecation. Ledn shifted to a fully collateralized, Bitcoin-only lending model, keeping client BTC in custody and not reusing it for yield.
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