Andreessen Horowitz's crypto arm purchased $15 million in Babylon's BABY tokens Wednesday to fund infrastructure allowing native Bitcoin to be used as onchain collateral without custodians.
The investment brings Babylon's total funding to $103 million following an $18 million Series A and $70 million Paradigm-led round.
BABY tokens surged 12% to trade around $0.02, though the token remains down 87% from its April 2025 all-time high.
What Happened
Co-founder David Tse said the funding will build BTCVaults, allowing Bitcoin to remain on its native blockchain while locked as collateral.
The vaults use zero-knowledge proofs to verify Bitcoin remains locked and enforce conditions without custodial control.
Less than 1% of Bitcoin is wrapped for DeFi use, while more than $1.4 trillion sits idle, according to Tse.
Babylon plans integration with Aave in Q2 2026.
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Why It Matters
Most Bitcoin collateral solutions require custody transfers or wrapped representations, introducing counterparty risk.
Babylon enables Bitcoin holders to use assets productively while maintaining control of private keys.
The architecture could expand Bitcoin's utility to financial products including lending, stablecoins and insurance.
Stanford professor Tse characterized the system as competing with centralized services like Coinbase and Kraken.
The investment signals institutional interest in infrastructure bridging Bitcoin with decentralized finance despite market volatility.
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