A16z Backs Babylon with $15M to Build Trustless Bitcoin Collateral Vaults

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Source: CryptoNewsNet Original Title: A16z backs Babylon with $15M to build trustless Bitcoin collateral vaults Original Link: A16z Crypto, the blockchain-focused venture capital firm, has invested $15 million in Babylon to support the development of BTCVaults, a new infrastructure designed to enable native Bitcoin to serve as collateral in on-chain financial systems.

The funding includes both capital and strategic guidance, according to Babylon. BTCVaults aim to address a longstanding gap in crypto infrastructure by allowing Bitcoin holders to lock BTC without transferring it to custodians or converting it into wrapped tokens.

The system anchors vaults on the Bitcoin base layer and uses cryptographic tools like witness encryption and garbled circuits to enforce collateralization rules via external smart contracts. Babylon says this structure preserves Bitcoin’s trustlessness while enabling use cases including lending, stablecoins, insurance, and structured products.

The investment reflects growing institutional interest in Bitcoin as a productive, self-custodied asset. Less than 1% of BTC supply is currently wrapped, while over $1.4 trillion in idle native Bitcoin remains difficult to deploy in decentralized finance without sacrificing custody or triggering regulatory complexities.

Babylon noted that the BTCVault ecosystem will expand the role of its BABY token, which will support coordination, participation, and value capture across vault applications.

BABY-10.71%
BTC-0.43%
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