Babylon Raises $15M from a16z for Trustless BTC Lending

Crypto News DeFi

Babylon Bags $15 Million from a16z to Power Trustless Bitcoin Lending

Written by Aaron S.,

Editor-In-Chief

Last Updated: January 08, 2026

Key Takeaways

Babylon raised $15 million from a16z Crypto via BABY token purchase to expand its trustless Bitcoin collateral infrastructure;
The protocol lets BTC holders use Bitcoin as on-chain lending collateral without wrapping or custodians, keeping BTC on-chain;
Aave Labs and Babylon will test Bitcoin-backed lending in Q1 2026, targeting an April 2026 launch of the Aave V4 "Bitcoin-backed Spoke".

Stop overpaying - start transferring money with Ogvio. Sign up, invite friends & grab Rewards now! 🎁

Babylon Bags $15 Million from a16z to Power Trustless Bitcoin Lending

BITDEGREE IN YOUR SOCIAL FEED

Babylon secured $15 million in funding from a16z Crypto through a purchase of its native BABY tokens to support the expansion of its trustless Bitcoin BTC $90,555.57 collateral infrastructure.

This protocol allows Bitcoin holders to use their BTC as collateral in on-chain lending systems without giving up control.

The investment was announced in a blog post published by a16z Crypto on January 7, aimed at advancing the development of Babylon's Bitcoin-native vaults and lending tools.

How to Transfer Money Without Fees? [Animated Tips 2025]

Did you know?

Want to get smarter & wealthier with crypto?

Subscribe - We publish new crypto explainer videos every week!

Babylon, founded in 2022 by David Tse and Fisher Yu and initially a Bitcoin staking protocol, is building a system of trustless vaults. These vaults keep BTC on the Bitcoin network while allowing users to use it as collateral on decentralized lending platforms.

A collaboration took place in December, when Babylon joined forces with Aave AAVE $165.45 Labs. They plan to launch a "Bitcoin-backed Spoke" within Aave V4, which enables BTC to serve as collateral without being wrapped or handled by third-party custodians.

Testing for this integration is expected in the first quarter of 2026, with a public product launch targeted for April 2026.

Most methods for using Bitcoin as collateral either involve custodial services or wrapped versions of BTC. Babylon's approach avoids these drawbacks by ensuring that Bitcoin remains on its base layer and is verifiable by external systems using cryptographic proofs.

Polymarket and Parcl announced a partnership to introduce prediction markets based on daily housing price indices. How do they work? Read the full story.