Tonight I read through Babylon’s native Bitcoin lending proposal again, focusing specifically on the repeatedly emphasized highlights. While reading, I wrote down details of the liquidation process in my notebook—trying to distinguish which parts truly move things forward and which are just made to sound more appealing. On the use of funds: the generated instruments are sent directly into the main liquidity hub, shared with other branches using the same pool. This architecture is designed to minimize losses caused by fragmentation. The interest rates aren’t simply copied from elsewhere either. They first anchor to the pricing framework of the main pool, then are fine-tuned according to Babylon’s own risk parameters. @BabylonLabs_io I ran several rounds of scenario reasoning against the documentation, and it feels, at least logically, more robust than pricing that is completely independent. $BABY
Self-custody on this part is what slightly put my mind at ease. The Bitcoin is locked in a specific script; redemption relies entirely on on-chain conditions and zero-knowledge proofs—there’s no third party holding the private key. The proposal says the underlying cryptographic scheme comes from a collaboration with a well-known university, and the paper is also planned to appear at next year’s top-tier conference. At minimum, this isn’t just empty slogan. During collateralization, you don’t need to first swap the Bitcoin into another asset. The circulation scope of the generated instruments is strictly limited: they can only move between the main hub, Babylon’s core branch, and compatible contracts. This is indeed different from the traditional approach of wrapping and then re-collateralizing, in terms of risk exposure. For liquidation: liquidators first take over using a wrapped asset with a premium, and then arbitrageurs use economic incentives to complete the actual redemption. Throughout the process, there’s no centralized party stepping in as a backstop, keeping intermediaries to the absolute minimum. #baby $BTC
When you connect all these pieces, Babylon’s direction still holds up. But there’s one detail in the timeline that left me a bit stunned. At the end of last year they said it would be live in the spring of this year. Now it’s August, and progress has stalled after the initial confirmation in early May. The rest still needs to go through review and voting. With a pace this slow, it’s somewhat like they drew an overly optimistic schedule themselves. Whether it ultimately can run as envisioned still depends on me checking the details a few more times before I make a final judgment.
Self-custody on this part is what slightly put my mind at ease. The Bitcoin is locked in a specific script; redemption relies entirely on on-chain conditions and zero-knowledge proofs—there’s no third party holding the private key. The proposal says the underlying cryptographic scheme comes from a collaboration with a well-known university, and the paper is also planned to appear at next year’s top-tier conference. At minimum, this isn’t just empty slogan. During collateralization, you don’t need to first swap the Bitcoin into another asset. The circulation scope of the generated instruments is strictly limited: they can only move between the main hub, Babylon’s core branch, and compatible contracts. This is indeed different from the traditional approach of wrapping and then re-collateralizing, in terms of risk exposure. For liquidation: liquidators first take over using a wrapped asset with a premium, and then arbitrageurs use economic incentives to complete the actual redemption. Throughout the process, there’s no centralized party stepping in as a backstop, keeping intermediaries to the absolute minimum. #baby $BTC
When you connect all these pieces, Babylon’s direction still holds up. But there’s one detail in the timeline that left me a bit stunned. At the end of last year they said it would be live in the spring of this year. Now it’s August, and progress has stalled after the initial confirmation in early May. The rest still needs to go through review and voting. With a pace this slow, it’s somewhat like they drew an overly optimistic schedule themselves. Whether it ultimately can run as envisioned still depends on me checking the details a few more times before I make a final judgment.
