Bitcoin (BTC) project Babylon took another step toward offering a decentralized finance (DeFi) experience on its $5 billion staking protocol akin to that seen elsewhere in the crypto world.
The latest development is the introduction of trustless vaults, designed to allow BTC holders to deposit their tokens without relying on a centralized entity, as outlined in a new white paper shared with CoinDesk on Wednesday.
In DeFi ecosystems, trustless vaults are a form of digital asset storage or management that removes the need for users to trust a central authority or intermediary. Instead, the systems use smart contracts to ensure security and enforce the rules of the vault.
Babylon says its vaults will allow bitcoin to be used as collateral in DeFi applications such as lending and stablecoin issuance, as well as the staking that its protocol provides. Users can also earn yield on their BTC holdings by staking it to support the operation of proof-of-stake networks. They then receive rewards
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