About
Babylon Labs is building the Bitcoin Trustless Vault — a protocol that allows Bitcoin holders to participate in DeFi ecosystems without ever relinquishing custody of their BTC. This new primitive enables Bitcoin to become truly composable with other assets and ecosystems in a trust‑minimized way.
Your challenge: design or prototype integrations that showcase new DeFi use cases for the Bitcoin Trustless Vault on Ethereum.
Note that this product is still under active development and auditing and not yet open-source.
💡 Challenge Focus We want builders to imagine what happens when BTC can seamlessly and securely back DeFi protocols. Think about how Vault‑secured BTC could power:
- Lending / Borrowing protocols (trustless BTC‑collateralized loans)
- Stablecoins (BTC‑backed or partially collateralized stable assets)
- Derivatives or Perpetual Futures (BTC‑based synthetic exposure)
- Insurance / Risk Products (slashing coverage, principal protection)
- Yield Aggregators / Restaking systems (BTC earning on‑chain yield)
Your proposal should explain both the financial mechanism (how the Vaulted BTC interacts with an Ethereum DeFi primitive) and the cryptoeconomic rationale (why it’s safe, decentralized, and novel).
Prizes
- A concise 2–5 page concept note or design brief
- Architecture and flow diagrams showing integration with the Bitcoin Trustless Vault
- Optional risk model or system sketch (e.g., vault collateralization, protocol parameters)
- Optional frontend or CLI demo of the application frontend
- Links to whitepapers, mockups, or GitHub prototypes if available
Qualification Requirements
Technical Insight & Feasibility – how clearly the design demonstrates secure trustless integration. DeFi Composability & Innovation – how creatively the Vault is used with existing Ethereum primitives. Economic Value & Scalability – potential for real on‑chain utility, TVL, or user adoption. Documentation & Clarity – quality of explanation, diagrams, and project organization.
