In a significant move for blockchain infrastructure, venture capital giant Andreessen Horowitz's crypto arm, a16z Crypto, has invested $15 million in a Series A funding round for Babylon Labs. This investment, finalized as reported by Fortune on April 10, 2025, is aimed at accelerating the development of Babylon's pioneering protocol that enables Bitcoin (BTC) to be used for staking and as native collateral.
The capital will fuel protocol development, security audits, and team expansion at Babylon Labs. The company is building a system called BTCVaults, designed to allow Bitcoin to be locked on its native blockchain while remaining verifiable to external applications. This enables BTC to be used as non-custodial collateral for on-chain financial activities like borrowing and lending, without requiring custodians or converting it into wrapped tokens.
Simultaneously, Babylon is developing a Bitcoin staking protocol. This would allow BTC holders to temporarily lock their coins to provide security services to other proof-of-stake blockchains, potentially earning yield in return. This represents a paradigm shift, leveraging Bitcoin's immense security to bootstrap economic safety for newer networks while creating a new utility for idle BTC.
The investment from a top-tier firm like a16z Crypto serves as a powerful endorsement for Bitcoin's evolving role beyond a store of value. Analysts view this as a strategic bet on blockchain interoperability and security convergence. Following the funding, Babylon is expected to enter an intensive testnet phase, with a mainnet launch potentially within 12-18 months.
The development comes amid growing institutional recognition of Bitcoin as collateral. Babylon's technology could unlock tens of billions in dormant Bitcoin capital for productive use in both decentralized and traditional finance, while preserving user self-custody.
