Babylon recently experienced a significant unstaking incident on April 17, where around $1.26 billion in BTC was withdrawn from the platform. This led to a notable decrease in Babylon's total value locked (TVL) as well as a drop in the price of its native token, BABY.

The unstaking event was highlighted by blockchain analytics firm Lookonchain on social media. Approximately 14,929 BTC (equivalent to $1.26 billion) was unstaked from Babylon. Consequently, Babylon's TVL plummeted from $3.9 billion to $2.6 billion within a day, marking a 32.7% decline. Presently, only 31,502 BTC remains staked in the protocol.

The BABY token also experienced a 9.8% depreciation in value in a single day, trading at $0.8 at the time of reporting. This unstaking incident stirred concerns about Babylon's stability and had broader implications for BTC-based DeFi protocols.

To address investor worries, Lombard Finance, a Bitcoin restaking protocol on Babylon, clarified that the unstaking was part of a planned move to transition to a new set of finality providers. Lombard Finance assured investors that the withdrawn funds would be restaked once the transition process was completed.

The recent unstaking event followed Babylon's recent airdrop of 600 million BABY tokens to early adopters, Phase 1 stakers, Pioneer Pass NFT holders, and developers. This event, along with the preceding unstaking of $21 million in BTC within a day, indicated a trend of capital withdrawal from the platform.