More than $10 billion worth of native bitcoin has already been activated through Babylon’s staking system, and a new integration with Ledger now extends that model into decentralized finance collateral. The change matters because it allows bitcoin holders to deploy BTC in DeFi without surrendering custody or relying on wrapped assets.
Babylon Labs announced a partnership with hardware wallet maker Ledger to add native Ledger signer support for its Trustless Bitcoin Vaults, or BTCVaults. The integration enables users to authorize vault transactions directly from a Ledger device using the company’s Clear Signing interface, according to the announcement. Transactions are verified and approved on the device itself rather than through browser wallets.
Can Native Bitcoin Finally Work As DeFi Collateral?
BTCVaults allow bitcoin to serve as collateral in decentralized finance while remaining on the Bitcoin network. Instead of bridges or custodians, the system uses programmable onchain conditions to govern how BTC can be deployed. That approach addresses a long-standing constraint in crypto markets: bitcoin remains the largest digital asset, yet only a fraction participates in DeFi. By comparison, Ethereum-based decentralized finance currently holds tens of billions in total value locked (TVL), according to data from DeFiLlama.
Babylon co-founder David Tse said the design removes a trade-off that historically limited bitcoin’s role in digital finance.
“Bitcoin is the largest crypto asset, yet most of it cannot be used in digital finance without giving up custody or relying on intermediaries,” Tse said. “Trustless Bitcoin Vaults remove that trade-off. Bitcoin stays on Bitcoin, governed by predefined conditions that are verified rather than trusted.”
Ledger’s role centers on transaction security. The company’s Clear Signing system displays full transaction details on the device screen before approval, allowing users to verify exactly what they are authorizing.
“If not self-custody, why crypto?” said Charles Guillemet, chief technology officer at Ledger. “True self-custody relies on uncompromising security.”
Babylon has been building what it calls “trustless Bitcoin productivity,” including a self-custodial bitcoin staking protocol that secures proof-of-stake chains and Layer 2 networks. Venture firm a16z Crypto previously purchased $15 million worth of Babylon’s BABY tokens to support development of BTCVault infrastructure. The next catalyst will be whether DeFi platforms begin integrating BTCVault-based collateral, potentially unlocking a larger share of bitcoin’s $1 trillion-plus market capitalization for decentralized finance activity.
