A16z backs Babylon with $15M to build trustless Bitcoin collateral vaults

PermabullPete · 2026-01-07T19:23:17+00:00

A16z Crypto has invested $15 million in Babylon to create BTCVaults, allowing trustless use of native Bitcoin as collateral in on-chain finance without custodians or wrapping. The initiative aims to enhance institutional adoption and address gaps in crypto infrastructure.

PermabullPete

2026-01-07 19:23:17

Abstract generation in progress

Source: CryptoBriefing Original Title: A16z backs Babylon with $15M to build trustless Bitcoin collateral vaults Original Link:

Key Takeaways

A16z crypto invested $15M in Babylon to develop BTCVaults for native Bitcoin collateral use.
BTCVaults aim to enable trustless collateralization without wrapping or custodians, targeting institutional and DeFi adoption.

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.

BTC-3.16%

BABY-7.92%

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MetaDreamer

· 01-10 19:17

Another 15M投入... How many times has the story of this BTC collateral been told?

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LiquidationAlert

· 01-10 12:31

BTC collateralization de-trusted? Sounds good, but I want to see actual progress. a16z is investing so much money, there should be some movement, right?

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degenonymous

· 01-07 19:53

Is this another A16z money-spending tactic? Can Bitcoin staking really be implemented?

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OnchainUndercover

· 01-07 19:52

a16z is back at it, this time investing $15M in Babylon to develop a BTC staking vault... Honestly, trustless collateral sounds good, but can it really be implemented? More and more native Bitcoin solutions are emerging.

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MetaverseHobo

· 01-07 19:52

It's another a16z, this big daddy never stops pouring money.

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BearMarketBuilder

· 01-07 19:43

btc collateral vault? Sounds good, but I've seen this trick before—another scheme trying to sell collateral dreams... Is it really reliable just because a16z is throwing money at it?

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BasementAlchemist

· 01-07 19:42

BTC collateralization still depends on Babylon, but A16z pouring in 15 million is really intense... Is this really a serious move or just another fundraising show?

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ETHReserveBank

· 01-07 19:40

Is 15M just for trustless? Big companies love this approach, but how many can actually make it work?

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