Babylon Labs has closed a $15 million funding round led by a16z crypto to accelerate development of BTCVaults, a native-bitcoin collateral infrastructure designed for onchain financial apps, the company said in a blog post Wednesday. What BTCVaults aim to do - BTCVaults let bitcoin be locked on the Bitcoin base layer while remaining verifiable to external systems. That verifiability lets apps enforce conditions—unlocking, liquidation and other rules—using cryptographic proofs rather than relying on custodians or wrapped tokens. - In short, Babylon’s approach seeks to enable BTC to be used directly as collateral in borrowing, lending and other collateralized products while preserving self-custody and the coin’s native status on Bitcoin. Why it matters - Most current onchain “BTC collateral” solutions depend on custodians or wrapped-BTC representations, which require users to cede control or convert their bitcoin. BTCVaults are designed to avoid those tradeoffs. - The move comes as institutions, banks and trading firms increasingly accept bitcoin as collateral for lending, derivatives and investment products, yet much of BTC’s supply remains inactive outside onchain finance. Babylon positions BTCVaults to unlock that capital across both DeFi and traditional finance integrations. How the funding will be used - Babylon says the $15 million will advance the core BTCVaults technology and fund integrations with external applications that need verifiable, non-custodial bitcoin collateral. a16z crypto will also provide strategic guidance based on its infrastructure investment experience. Market reaction - Babylon’s native token, BABY, jumped about 13% following the announcement. Bottom line - The investment backs a bet that native, verifiable bitcoin collateral can bridge Bitcoin’s base-layer security with a broader set of onchain and offchain financial products—without sacrificing self-custody or forcing users into wrapped assets. Read more AI-generated news on: undefined/news