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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).