Decline in Babylon’s Total Value Locked
The Bitcoin staking platform Babylon has experienced a significant decline in its total value locked (TVL), plummeting by 32% due to a mass withdrawal of 14,929 Bitcoin, valued at approximately $1.26 billion. This massive unstaking event was brought to light by blockchain analytics company Lookonchain, which highlighted several wallets involved in the withdrawals.
“One particularly stood out for dominating the withdrawals with over 13,000 BTC, representing a staggering $1.1 billion.”
Impact of Withdrawals on Babylon’s Staking Capacity
On April 17, the capacity for staking within Babylon was notably altered as the price of Bitcoin lingered around $84,400. Following the withdrawals, Babylon’s TVL decreased from $3.97 billion to $2.68 billion, as tracked by DeFi data aggregator DefiLlama. The removals came just ahead of Babylon’s planned transition period, which was associated with Lombard Finance—a decentralized finance (DeFi) protocol. Lombard indicated that the timing of the unstaking coincided with the conclusion of Babylon’s phase 1 cap 1 and followed their announcement about teaming up with new finality providers.
Community Speculations and Assurances
Members of the Babylon community are speculating on the identities behind the unstaked Bitcoins, with theories ranging from possible connections to the Chinese government to standard market behavior linked to traders liquidating assets. Furthermore, Lombard Finance has assured users that the unstaked BTC will be redeposited back into Babylon once the unbonding process is finalized. The team confirmed:
“All of this BTC will be staked back into Babylon as soon as the unbonding is complete.”
Airdrop Announcement and Market Behavior
Notably, this significant market movement comes on the heels of an airdrop announcement made by Babylon on April 3, which was aimed at rewarding early participants, Phase 1 stakers, NFT holders, and developers. During this airdrop event, the platform allocated a total of 600 million BABY tokens, subsequently leading to an initial significant withdrawal of $21 million worth of Bitcoin from the protocol. According to Kevin He, co-founder of Bitlayer, this type of behavior is typical in the market following reward distributions as investors often seek to cash out.
Conclusion
Babylon remains a key player in the Bitcoin DeFi space, having reached a high of over $6 billion in TVL last December. The platform’s co-founder, Fisher Yu, emphasized that it aims to facilitate Bitcoin staking in a way that minimizes the risks associated with relying on third parties, thus fostering a more secure environment for decentralized investments.
