The Babylon platform aims to transform the financial utility of Bitcoin by allowing users to use their holdings as productive collateral without transferring assets to third parties.
Unlike the current model, Relies on a centralized intermediary or “wrapped” version (wrapped) BTCthis decentralized lending system allows you to generate revenue while maintaining sovereignty over your private keys.
As reported on January 7, the project, led by engineer and Stanford University professor David Tse, has raised $15 million in a funding round from cryptocurrency firm A16z.
How do Bitcoin loans work in Babylon?
Babylon’s technology architecture, called BTCVault, enables you to: loss Bitcoin native is verifiably blocked As collateral that remains on its own blockchain.
Unlike traditional methods, this system Use zero-knowledge proofs (zero knowledge proof) Confirm in real-time that your assets still exist without having to transfer them to a third party.
This operation requires token encryption (witness encryption) and the modified circuit (Garbled circuit).
These tools allow external applications to verify collateral blocking and automatically execute settlement or unlock rules through smart contracts, eliminating the discretionary control of intermediaries like Coinbase and Tether.
David Tse emphasized that this design avoids converting the asset into a synthetic representation (“wrapped BTC”) and allows Bitcoin to be “productive” directly in its original form.
with him integration into ghost Planned for Q2 2026this infrastructure enables the creation of not only loans, but also stablecoins, insurance, and structured financial products, consolidating BTC as a dynamic reserve asset that never leaves the wallet of its owner.
