Activating Bitcoin in DeFi: Babylon’s Trustless Path to BTCfi

AthenaX Livestream with Jenks Guo (Babylon Labs) \-

“Bitcoin holders don’t want yield if it means losing control. Trustless design is the only way BTCfi works at scale.”

Guest Bio

Jenks Guo is the Head of Developer Relations at Babylon Labs. He leads developer education, documentation, and ecosystem programs around Babylon’s Bitcoin staking and trustless Bitcoin vault products, helping developers and institutions unlock Bitcoin’s utility without compromising self-custody.

Key Takeaways

Wrapped BTC and bridges introduce real systemic risk
Trustless vaults let BTC stay on Bitcoin while working in DeFi
Babylon already secures $5B+ in native BTC staking
Lending unlocks far more utility than pure staking

BTCfi succeeds only if self-custody is preserved

Introduction

Babylon is building trustless infrastructure that lets Bitcoin generate yield in DeFi—without wrapping, bridges, or custodial risk.

In this AthenaX livestream, Jenks explains why trustlessness matters for Bitcoin, how Babylon enables native BTC participation in DeFi, and what changes when Bitcoin holders can finally earn yield without wrapping or bridges. The conversation covers Babylon’s staking traction, the new trustless vault, and a recent collaboration with the Aave v4 update.

From Ethereum Mining to Bitcoin Infrastructure

Jenks’ Web3 journey started with Ethereum mining during COVID— using GPUs as heaters while earning daily income. That hands-on experience taught him how proof-of-work functions in practice.

His transition into product work came later, integrating wallets and NFTs into a Web2 platform with tens of millions of users. From there, open-source communities (Filecoin/IPFS) drew him deeper into Web3—until a new idea stuck:

Economic engineering can solve real problems—if it’s designed properly.

That idea eventually led him to Babylon and the challenge of making Bitcoin useful without sacrificing its core principles.

What Is BTCfi—and Why It Matters

BTCfi simply means bringing Bitcoin into decentralized finance. Today, most BTC DeFi participation relies on wrapped tokens or bridges, which introduce trust assumptions and custodial risk.

Babylon’s mission is to remove those assumptions.

Highlights

Q1: What problem is Babylon solving for Bitcoin holders?

Jenks: Most BTC DeFi today requires wrapped BTC or bridges, which depend on custodians, multisigs, or oracle systems. That creates de-pegging risk, custody risk, and governance risk.

Babylon builds native, trustless Bitcoin technology, so users can participate in DeFi without giving up control of their BTC.

Babylon × Aave: Why This Matters

Babylon is integrating its trustless Bitcoin vault into Aave v4, enabling:

BTC-backed lending markets to Ethereum
Native Bitcoin collateral (no wrapping)
Potentially higher-yield strategies than pure staking

This marks a major step in connecting Bitcoin liquidity to the largest DeFi lending markets.

Q2: What is the Bitcoin Trustless Vault?

Jenks: Think of it as programmable Bitcoin. A user locks BTC directly on the Bitcoin chain using a UTXO-based structure. That lock is then verified on another chain using cryptographic proofs (including ZK-SNARKs). The BTC never leaves Bitcoin, but it becomes usable in DeFi elsewhere.

Q3: What can users actually do with BTC using the trustless vault?

Jenks:

The first optimized use case is DeFi lending.

Example:

You lock $1M worth of BTC on Bitcoin
The position is verified on Ethereum
You borrow ~$500k USDC against it
You deploy that capital in DeFi strategies

Your BTC stays locked and self-custodied, while the borrowed capital works for you.

Q4: Why is “trustless” such a big deal for Bitcoin?

Jenks: For large holders and institutions, custody and governance risk matter more than yield.

These parties operate within two key principles:

Native & non-custodial – you never hand over keys
Permissionless & attack-resistant – no party can shut the system down or game it

Trustless design uses math, cryptography, and game theory so the system doesn’t rely on human trust, which removes human error risks.

Q5: How big is Babylon’s traction today?

Jenks: Babylon’s staking protocol currently has ~44,000 BTC locked, worth ~$5.1B, making it one of the largest native Bitcoin staking systems live today.

Final Thoughts

Jenks closes with a broader reflection on the industry: perception shapes experience. Time in crypto isn’t wasted if it leads to better people, better understanding, and better systems.

Babylon’s bet is simple—but difficult:

If Bitcoin is going to enter DeFi, it must do so without compromise.