#baby $BABY Here's something I haven't seen anyone bring up: what happens to small holders?
The vault design is elegant. But it's also expensive. Generating ZK proofs takes real computational power. Pre-signing transactions requires multiple steps. And the challenge windows mean you might need to stay online and monitor things for hours or days.
All of that costs money — in time, in gas fees, and in infrastructure.
Now ask yourself: is this worth it for someone holding 0.01 BTC?
Probably not.
Because if you're a small holder, the fees alone might eat up any profit you could make. You'd be paying more in gas and proof generation than you'd earn in yield or borrowing power. So these vaults become, by default, a tool for whales and institutions.
That's not necessarily evil. It's just economics. But it does create a gap. The people who could benefit most from using their BTC as collateral — small holders who need liquidity — are the ones least likely to afford the process.
So what happens? They stay on centralized exchanges. They keep using custodial wallets. They don't get the "trustless" benefit at all.
Babylon's vaults are technically accessible to anyone. But economically, they're gated. And that's a different kind of centralization.
I don't have a solution for this. But I think it's worth asking: if the system only works for wealthy users, is it really decentralized?
@BabylonLabs_io
The vault design is elegant. But it's also expensive. Generating ZK proofs takes real computational power. Pre-signing transactions requires multiple steps. And the challenge windows mean you might need to stay online and monitor things for hours or days.
All of that costs money — in time, in gas fees, and in infrastructure.
Now ask yourself: is this worth it for someone holding 0.01 BTC?
Probably not.
Because if you're a small holder, the fees alone might eat up any profit you could make. You'd be paying more in gas and proof generation than you'd earn in yield or borrowing power. So these vaults become, by default, a tool for whales and institutions.
That's not necessarily evil. It's just economics. But it does create a gap. The people who could benefit most from using their BTC as collateral — small holders who need liquidity — are the ones least likely to afford the process.
So what happens? They stay on centralized exchanges. They keep using custodial wallets. They don't get the "trustless" benefit at all.
Babylon's vaults are technically accessible to anyone. But economically, they're gated. And that's a different kind of centralization.
I don't have a solution for this. But I think it's worth asking: if the system only works for wealthy users, is it really decentralized?
@BabylonLabs_io