Babylon

BABY

Future

DeFi

Bitcoin

<p class="is-style-lead">Babylon Labs has introduced a breakthrough in decentralized finance with the launch of trustless Bitcoin vaults.</p> 
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   <li>Babylon launched trustless Bitcoin vaults on Aug. 6, enabling native BTC to interact with DeFi without bridges or custodians.</li> 
   <li>Vaults use BitVM3 and zero-knowledge proofs to enforce smart contract logic while BTC remains on-chain.</li> 
   <li>The feature expands BTC’s role in DeFi and complements Babylon’s Bitcoin staking ecosystem.</li> 
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<p>Announced via an Aug. 6 <a href="https://x.com/babylonlabs_io/status/1953161667682144676?s=46&amp;t=nznXkss3debX8JIhNzHmzw" target="_blank">post</a> on X, these vaults allow native Bitcoin (<a href="https://crypto.news/price/bitcoin/" target="_blank">BTC</a>) to be used in decentralized finance applications, such as lending, stablecoin minting, and perpetual futures, without wrapping, bridging, or relying on custodians.</p> 
<h2 class="wp-block-heading" id="bitcoin-in-defi-without-leaving-bitcoin">Bitcoin in DeFi without leaving Bitcoin</h2> 
<p>The vaults function by locking Bitcoin UTXOs under preset cryptographic rules. To unlock BTC, users must submit zero-knowledge proofs that validate smart contract logic without exposing private data. Babylon leverages BitVM3, a Bitcoin-native proof verification framework using ZKPs and garbled circuits, to ensure BTC never leaves the Bitcoin blockchain.</p> 
<p> You might also like: <a href="https://crypto.news/kraken-bitcoin-staking-babylon-integration-2025/"> Kraken launches Bitcoin staking service through Babylon integration </a> </p> 
<p>This design enforces DeFi logic, including liquidations and redemptions, without the need for intermediaries, allowing native Bitcoin to function as collateral on Ethereum (<a href="https://crypto.news/price/ethereum/" target="_blank">ETH</a>), Cosmos (<a href="https://crypto.news/price/cosmos-hub/" target="_blank">ATOM</a>), and other chains. </p> 
<p>A borrower might, for example, receive $50,000 in Ethereum stablecoins and lock Bitcoin in a vault. A liquidator can claim the collateral by submitting a legitimate ZKP in the event that the value of Bitcoin declines.</p> 
<p>Use cases for the vaults include lending, stablecoin issuance, perpetual decentralized exchange collateral, and liquid staking, all while BTC remains self-custodied.</p> 
<h2 class="wp-block-heading" id="powering-btcfi-and-expanding-babylon-s-vision">Powering BTCFi and expanding Babylon’s vision</h2> 
<p>The trustless vaults are part of Babylon’s broader push to integrate Bitcoin into decentralized economies. DeFi uses less than 1% of the roughly $1.8 trillion market capitalization of Bitcoin as of August 2025. Babylon’s solution, which supports native yield generation and aligns with Bitcoin’s philosophy, can unlock this capital.</p> 
<p>Additionally, the vaults are connected to Babylon’s $5 billion Bitcoin staking protocol, which went live on mainnet in Aug. 2024. Babylon positions Bitcoin as a core asset for <a href="https://crypto.news/babylon-genesis-launches-as-first-ever-layer-1-secured-by-bitcoin/" target="_blank">securing</a> proof-of-stake networks by fusing vault functionality with staking rewards, such as BABY tokens.</p> 
<p>Future developments in Babylon’s <a href="https://crypto.news/babylon-unveils-2025-roadmap-with-bitcoin-multi-staking-and-evm-mainnet-launch/" target="_blank">roadmap</a> include multi-staking support, EVM integration, and a cross-chain Bitcoin liquidity layer expected in Q1 2026.</p> 
<p> Read more: <a href="https://crypto.news/babylon-chain-may-be-the-most-undervalued-bitcoin-defi-bet-nansen/"> Babylon chain may be the most undervalued Bitcoin DeFi bet: Nansen </a> </p>

Babylon unveils trustless BTC vaults for DeFi and staking

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