RIADeFiPublished by Ketju Research
Research files · staking

Ketju research: Lombard (LBTC)

Adverse research assessmentPublished by Ketju Research

This file describes the economic claim, control, loss, and exit evidence. Firm-shelf policy is a separate conclusion; client action and amount belong to the advisor. Not investment, legal, tax, or compliance advice.

Research summary

ADVERSE RESEARCH ASSESSMENT on uncompensated trust and reward dependency. The old memo correctly identified a 14-member institutional consortium and BABY-funded yield, but primary sources do not support its bankruptcy-remoteness claim or its statement that Lombard absorbs Babylon slashing before holders. Current Lombard documentation instead says LBTC represents BTC staked through Babylon, consortium members collectively authorize deposits, staking, mints, burns and native-BTC payouts with a two-thirds threshold, and slashing can reduce staked BTC; Lombard currently labels exposure 0.1%. BABY rewards are sold for BTC to raise the LBTC/BTC exchange rate, with an illustrated typical 0.5% to 1% APY and 8% reward commission. Hardware-backed keys, Bascule verification, proof of reserves, pauses and upgrade timelocks are meaningful controls, but native redemption can take ten days and still requires consortium operation. Correcting the exposure from ETH staking to Bitcoin/app-chain staking leaves the research assessment adverse: the holder bears consortium, Babylon slashing, oracle, contract and ten-day exit dependencies, while two earlier loss-allocation claims were not supported by current primary documentation. The observed reward rate is evidence about the return source, not a hurdle.

Observable review triggers

  • Net LBTC yield exceeds 2% for 12 consecutive months and comes predominantly from durable transaction fees rather than BABY issuance or discretionary incentives
  • A funded enforceable first-loss layer absorbs Babylon slashing before LBTC holder principal
  • The live consortium, threshold, HSM policies, pause roles, upgrade delay and Finality Provider allocation are published and reconcile to deployed systems
  • Independent reserve and redemption reporting shows 24 consecutive months without unexplained deficit or missed payout
  • Proposed-size native redemption and secondary sale pass the written time and slippage limits under stressed conditions

Facts on file

Research assessment
Adverse
Client selection
Not considered
Exposure
staking
Chains examined
Ethereum
Instruments
LBTC
Reviewed
Next review

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