The Babylon Genesis V2 upgrade is coming to nodes to help advance Babylon Genesis as the trade center for BTCFi.
This upgrade focuses on cross-chain composability and token creation enhancements by introducing community favorite extensions, a well and truely “Builders Upgrade”. We believe this upgrade will bring UX improvements to users in core DeFi use cases and empower developers with the tools that fully leverage the interchain connectivity enabled by IBC. This marks a significant evolution in interoperability for Babylon Genesis, making it a better place to build and solidifying its status as a full member of the interchain universe and a BTCFi trade center.
Unlocked Capabilities
The improvements enhance both developer and end-user experiences, as well as the chain’s interoperability and security. They allow easier token creation, streamline complex workflows into single transactions, and limit the impact of IBC-related bugs if any were to surface.
TokenFactory Module
The tokenfactory module enables permissionless, programmatic creation and management of native tokens on Babylon Genesis, allowing projects to deploy tokens integrated with the Cosmos SDK’s bank module. It offers an alternative to CW-20 tokens, which raised composability concerns due to their non-native bank status and reliance on governance for deployment.
Details of the TokenFactory module can be found at babylonlabs-io/tokenfactory (an unmodified forked of the audited codebase from strangelove).
IBC Callbacks
The IBC callbacks middleware allows IBC packets to include payloads that automatically invoke application logic—such as smart contract functions—upon receipt or acknowledgement. This enables expressive, atomic cross-chain workflows, where an incoming IBC packet can trigger actions like token transfers and contract calls with atomic success or failure.
For more information, check out the ibc-go repository.
Packet Forwarding Middleware
The Packet Forwarding Middleware (PFM) allows Babylon Genesis to forward IBC packets to other chains, enabling seamless multi-hop transfers across PFM-enabled chains. This lets users reach destination chains with just one single transaction.
More about PFM is available in the ibc-apps repository.
IBC Rate Limiting
To protect against large-scale token outflows, the IBC Rate Limiting middleware wraps the transfer module to limit how much of an asset can leave the Babylon Genesis chain within a specified period. This security mechanism prevents malicious drains while maintaining cross-chain functionality during market volatility or security incidents such as bridge exploits.
Initially, a limit of 10% outflow of the native BABY supply within a 24 hour sliding window will be enforced. Protection for other assets can be enabled via initiating a governance process.
More documentation about the IBC Rate Limiting module is available in the source repository.
Upgrade Timeline
The modules are now live on testnet. The mainnet governance proposal is planned to be submitted on Thursday 12 Jun 2025 with the upgrade going live on Monday 16 Jun 2025.
Babylon Genesis Validators should keep an eye out for the software upgrade proposal which will include the addition of new modules and adding rate limiting parameters.
Security Audits
As always, security is of the outmost important for any Babylon Genesis upgrade. We have employed Informal Systems and Oak Security to conduct a thorough inspection of our implementation. Reports will be shared ahead of the mainnet governance proposal in our docs page.
Looking Ahead
With the V2 upgrade, Babylon Genesis is receiving a substantial boost in developer experience, allowing protocols or collaborators to build powerful features without incurring high costs. The TokenFactory module simplifies the creation and management of native tokens. The addition of IBC Callbacks, PFM, and ICA provides Babylon Genesis with an IBC supercharge, extending its interoperability layer capabilities to new heights. Implementing IBC rate limiting also enhances asset-specific security.
We look forward to continuing this synergistic relationship with Babylon Genesis native builders and incorporating more feedback. We are committed to a philosophy of pragmatism and user-focused development that helps us build faster and create a greater impact.
For more updates, follow the Babylon Labs blog.
