A newly disclosed software flaw in Bitcoin staking protocol Babylon could allow malicious validators to disrupt parts of the network's consensus process, potentially slowing block production at key stages, based on developers.
The vulnerability affects Babylon's block signature scheme, referred to as BLS Vote Extension, which is meant to prove that validators have agreed on a block.
The flaw allows malicious validators to intentionally omit the block hash field when sending their vote extension, which may lead to validator consensus issues throughout the network's epoch boundaries, based on a GitHub post published Thursday.
The block hash field tells validators which blocks they are literally voting for throughout the consensus process, a field that could be omitted on account of the bug.
The vulnerability could theoretically allow a malicious validator to crash other validators during vital consensus checks during epoch limits, leading to a slowdown in block production if multiple validators were affected.
Babylon BLS voting expansion error. Source: github.com
“Intermittent validator crashes at epoch boundaries would decelerate the creation of the epoch boundary block,” wrote pseudonymous contributor GrumpyLaurie55348, who discovered the vulnerability. “Babylon then dereferences this null pointer in consensus-critical code paths (particularly ConfirmVoteExtension and likewise proposal-time vote verification), leading to a runtime panic,” they added.
Cointelegraph has reached out to Babylon for comment on the potential impact and solutions to the vulnerability but didn’t receive a response via publication.
The bug was not described as being actively exploited, but developers warned that it may very well be abused if not fixed.
Babylon continues to expand Bitcoin’s earning capability
Babylon is taken into account a major opportunity for Bitcoin-based decentralized finance, introducing Bitcoin-native staking for the primary time within the cryptocurrency's history.
Bitcoin-based decentralized finance (DeFi), also referred to as BTCFi, is a brand new technological paradigm that goals to bring DeFi capabilities to the world's first blockchain network, enabled by the launch of the Runes Protocol throughout the Bitcoin halving in 2024.
On Wednesday, Babylon raised $15 million in funding from a16z Crypto through the sale of Babylon's native BABY (BABY) token to Andreessen Horowitz's digital asset arm.
The funding will support the further development of Bitcoin-native DeFi infrastructure, a16z Crypto said in a blog post published on Wednesday.
In early December, Babylon partnered with Aave Labs to introduce Bitcoin-backed lending to Aave v4, allowing BTC for use as collateral without wrappers or custodians. The product is anticipated to enter the test phase in the primary quarter of 2026, and the joint market launch is planned for April 2026.
