TL;DR
- Babylon recorded the largest withdrawal in its history with 14,929 BTC leaving the protocol, drastically reducing its locked funds.
- The drop coincided with the launch of Genesis L1 and the debut of the BABY token, which quickly lost value after the end of promotional trading.
- The funds were sent to four new unidentified addresses; one of them now holds over $1.1 billion in BTC with no further movement.
Babylon Labs recorded its largest Bitcoin withdrawal since its creation. A total of 14,929 BTC has been withdrawn from the protocol.
The withdrawals coincided with the launch of its new Genesis L1 chain and the initial distribution of its BABY token. This marks a significant reduction in the amount of BTC locked for staking and farming functions, which previously exceeded 57,000 BTC.
The withdrawn funds were sent to four new, unidentified addresses. One of them now holds over $1.1 billion in BTC. Since the transaction, the Bitcoins have remained unmoved, suggesting that the funds may either return to their original depositors or stay inactive in the short term.
Babylon’s TVL Plummets
After the withdrawal, Babylon’s total value locked (TVL) dropped to $2.68 billion, with 31,701 BTC still in the protocol. Until now, the platform had held nearly half of all BTC locked in the DeFi ecosystem, even surpassing companies like Mara Holdings. The exit raises questions about the stability of the platform’s incentive model, especially in a highly volatile environment.
The BABY token lost value after its token generation event (TGE), currently trading at $0.08. The drop accelerated after the end of a promotional trading period on LBank, as early airdrop recipients chose to sell their tokens. Although BABY offers additional rewards to users who stake, the mismatch between these rewards and the risk of holding BTC during uncertain times has caused distrust among investors.
Sustained by Intermediaries
Babylon has not proposed new incentives since January nor announced measures to increase deposits. Nevertheless, Lombard Finance and Solv Protocol remain among the main depositors. According to current data, over 135,000 individual users hold funds through these intermediaries.
With BTC priced around $84,800, the possibility that the withdrawn funds may be sold could worsen the bearish trend.
