Babylon Protocol Sees $1.26 Billion Bitcoin Unstaken, TVL Plummets 32%
April 17, 2025 marked a notable event in the decentralized finance (DeFi) sector when Bitcoin staking protocol Babylon recorded its largest Bitcoin withdrawal to date, with a total value of up to $1.26 billion.
According to data from blockchain analytics firm Lookonchain, a total of 14,929 BTC was unstaken from Babylon, causing a huge shock to the total value locked (TVL) on the platform. The firm also detected four major addresses making the withdrawals, with the amounts of 299 BTC, 499 BTC, 1,000 BTC, and especially 13,129 BTC – the address that accounted for the majority, worth about $1.1 billion at the BTC price at the time, about $84,400 per BTC.
The event caused Babylon’s TVL to drop from $3.97 billion to just $2.68 billion, a 32% drop, according to updated data from DefiLlama.
The community quickly speculated about the reason behind the de-staking move. Some X (Twitter) users suggested that the withdrawn Bitcoins could belong to the Chinese government, while others suggested that it was simply a strategic move to restructure their portfolios, hedge against risk, or simply seek liquidity.
However, new information from Babylon Labs suggests that the cause may have come from an internal transition of Lombard Finance, a decentralized finance protocol affiliated with Babylon. Babylon reshared a message from Lombard stating that the BTC de-staking was part of a plan to transition to a new set of end-user service providers.
Lombard explained that they had timed it so as not to impact user rewards, with plans to re-stake all BTC after the transition was complete. The event coincided with the end of Babylon’s Phase 1 on April 24.
Previously, on April 3, Babylon had also completed a major airdrop of 600 million BABY tokens to early stakers, developers, and NFT holders. Shortly after the airdrop, the protocol also recorded a small $21 million in unstaking – which experts say is a normal reaction to a major reward event.
While Babylon has experienced short-term volatility, the global crypto ecosystem continues to expand. Recently, the City of Panama officially launched the option to pay for public services in digital currencies, including BTC, ETH, USDC, and USDT. The system is integrated through a partner bank, allowing the conversion of cryptocurrencies to USD at the point of payment, paving the way for the adoption of blockchain technology in the public sector.