A newly disclosed software flaw in the Bitcoin staking protocol Babylon may allow malicious validators to disrupt parts of the network’s consensus process, potentially slowing block production during key periods, according to developers.
The vulnerability affects Babylon’s block signature scheme, known as the BLS vote extension, which is used to prove that validators have agreed on a block.
The bug enables malicious validators to intentionally omit the block hash field when sending their vote extension, which could lead to validator consensus issues during the epoch boundaries of the network, according to a GitHub post published on Thursday.
The block hash field tells validators which blocks they are actually voting for during the consensus process, a field that the bug allows to be omitted.
Through the vulnerability, a malicious validator could theoretically crash other validators during key consensus checks during epoch boundaries, leading to a slowdown in block production if multiple validators were affected.
Babylon BLS vote extension bug. Source: github.comRelated: Bitcoin DeFi TVL up 2,000% amid bumper 2024 for BTC price, adoption
“Intermittent validator crashes at epoch boundaries, which would slow down the creation of the epoch boundary block,” wrote pseudonymous contributor GrumpyLaurie55348, who discovered the vulnerability. “Babylon then dereferences this nil pointer in consensus-critical code paths (notably VerifyVoteExtension, and also proposal-time vote verification), causing a runtime panic,” they added.
Cointelegraph has reached out to Babylon for comment on the potential impact and resolutions to the vulnerability, but had not received a response by publication.
The bug has not been described as actively exploited, but developers warned it could be abused if left unresolved.
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Babylon continues expanding Bitcoin’s yield-bearing capabilities
Babylon has been seen as a significant opportunity for Bitcoin-based decentralized finance, thanks to introducing Bitcoin-native staking for the first time in crypto history.
Bitcoin-based decentralized finance (DeFi), also known as BTCFi, is a new technological paradigm that aims to bring DeFi capabilities to the world’s first blockchain network, enabled by the introduction of the Runes protocol during the 2024 Bitcoin halving.
On Wednesday, Babylon received $15 million in funding from a16z Crypto through the sale of Babylon’s native BABY (BABY) tokens to the digital asset arm of Andreessen Horowitz.
The funding will support the continued development of Bitcoin-native DeFi infrastructure, said a16z Crypto in a blog post published Wednesday.
Earlier in December, Babylon partnered with Aave Labs to bring Bitcoin-backed lending to Aave v4, enabling BTC to be used as collateral without wrappers or custodians. The product is expected to enter its testing phase in the first quarter of 2026, with a joint launch set for April 2026.
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