Babylon Labs' Bitcoin staking protocol has experienced a significant drop in its total value locked (TVL), plummeting by 32% following the unstaking of $1.26 billion worth of Bitcoin. The blockchain analytics firm Lookonchain reported that 14,929 BTC were unstaked from Babylon, with a majority coming from a single address holding assets valued at $1.1 billion. As a result, Babylon's TVL decreased from $3.97 billion to $2.68 billion. Speculation around the unstaking suggests that it may relate to a transition that Lombard Finance is implementing to adopt new finality providers. Lombard Finance confirmed the timing of the unstaking, ensuring that users would not miss rewards during this process, and indicated plans to restake the BTC once the unbonding period is complete. This event follows a recent airdrop announcement by Babylon, which allocated 600 million BABY tokens to early adopters, stakers, and NFT holders, leading to another $21 million in BTC being unstaked shortly thereafter. The protocol once peaked at a TVL of over $6 billion late last year, establishing itself as a major player in Bitcoin DeFi.

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