Summary
Ketju does not approve Lombard (LBTC): holders carry consortium, Babylon slashing, oracle, contract and ten-day redemption risk for a yield Lombard itself puts at a typical 0.5% to 1%. LBTC represents BTC staked through Babylon. Fourteen institutional consortium members together authorize deposits, staking, mints, burns and native-BTC payouts, with a two-thirds threshold. Slashing can reduce the staked BTC, and Lombard currently labels that exposure 0.1%. Lombard sells BABY rewards for BTC to raise the LBTC/BTC exchange rate, and takes an 8% commission on rewards. Hardware-backed keys, Bascule verification, proof of reserves, pauses and upgrade timelocks are real controls. Native redemption can still take ten days and needs the consortium to act. The primary sources do not support two earlier claims: that LBTC is bankruptcy-remote, and that Lombard absorbs Babylon slashing before holders. We count LBTC as Bitcoin and app-chain staking, and not as ETH staking. The observed reward rate shows where the return comes from, and Ketju does not use it as a hurdle.
Review triggers
- Net LBTC yield exceeds 2% for 12 consecutive months and comes mainly from lasting transaction fees, and not from 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 match deployed systems
- Independent reserve and redemption reporting shows 24 consecutive months without unexplained deficit or missed payout
- A native redemption and a secondary sale at the proposed size pass the written time and slippage limits under stressed conditions
Facts
- Verdict
- Not approved
- Type
- Staking
- Chains examined
- Ethereum
- Instruments
- LBTC
- Reviewed
- Last confirmed