Babylon Labs has dropped 32% in total (TVL) due to the lack of $1.26 billion in Bitcoin staking from the platform. On April 17, Blockchain Analytics company LookonChain flagged several addresses involved in the withdrawal, totaling 14,929 BTC.
The majority of the unorganized bitcoin at around 13,129 btc is valued at around $1.1 billion and comes from one address. This significant move in funding has reduced Babylon’s TVL from $3.97 billion to $2.6 billion.
Staking coincided with Babylon’s recent airdrop on April 3, where it distributed 600 million baby tokens to early adopters, including Phase 1 stakers, NFT owners and developers. According to Kevin He, co-founder of Bitlayer, after Airdrop, the $21 million Bitcoin was not sorted out.
Lombard Finance, which has played a role in the current transition, has retweeted an announcement about the staking event. Bitcoin explained that it has not been integrated as part of its transition to a new set of new final providers.
Lombard said Bitcoin will be placed in Babylon once the bonding process is complete, which is expected to occur after the end of Babylon’s Phase 1 Cap 1 on April 24th.
It is not clear who is behind the address associated with staking, but speculation is occurring within the community. Some suggest that Bitcoin may belong to the Chinese government, while others suggest that it could simply be a risk-off move or that traders could be liquidated. Babylon Labs has not yet commented on the situation.
Babylon is one of Bitcoin staking’s biggest debt platforms, offering a system that allows you to directly stain Bitcoin without relying on third-party intermediaries. The platform reached a peak TVL of over $6 billion in December. Despite recent declines, Babylon continues to promote a safe and decentralized staking model as a core function.
The timing of a massive, stageless event combined with Babylon’s airdrop raised concerns about the stability of its platform. However, the protocol ensures that funds will be suspended as part of the ongoing transition. The real motivation behind the withdrawal remains the subject of speculation, but the massive movement of Bitcoin emphasizes the volatility and complexity of the defi space.