What is Babylon (BABY)?

Deep Dive

1. Purpose & Value Proposition

Babylon solves the problem of idle Bitcoin by allowing BTC holders to earn yield while keeping their assets on the Bitcoin blockchain. It exports Bitcoin's robust security to help secure other proof-of-stake (PoS) chains and decentralized applications. This transforms Bitcoin from a passive store of value into an active, productive asset within decentralized finance (DeFi).

2. Technology & Architecture

The protocol uses advanced cryptography, such as Extractable One-Time Signatures (EOTS), to enable non-custodial staking and fast exits. Its first live network, Babylon Genesis, is a Bitcoin-secured Layer 1 built with the Cosmos SDK. It operates on a dual-staking model: users can stake either BTC or the native BABY token (or both) to help secure the network and earn rewards.

3. Tokenomics & Ecosystem Fundamentals

The BABY token has a capped genesis supply of 10 billion. It serves three core functions: paying transaction fees (gas), voting on governance proposals, and staking for network security. An 8% annual inflation funds rewards, split between BTC and BABY stakers. The ecosystem is expanding with initiatives like Trustless Bitcoin Vaults for lending, backed by a $15 million investment from a16z Crypto in January 2026, and a planned integration to use native BTC as collateral on Aave V4.

Conclusion

Fundamentally, Babylon is an infrastructure project turning Bitcoin into a verifiable security layer for the broader crypto ecosystem, coordinated by its utility token, BABY. How will the success of its Bitcoin lending vaults influence the adoption of native BTC in DeFi?