Narrated Samurah ibn Jundub:
The Prophet (ﷺ) said: A boy is in pledge for his Aqiqah, Sacrifice is made for him on the seventh day, his head is shaved and he is given name.
Abu Dawud said: The word wa yusamma is sounder as narrated by Salam b. Abi Muti' from Qatadah, and narrated by Iyas b. Daghfal and Ash'ath from al-Hassan who narrated wa yusamma (and he is given a name). Sunan Abi Dawud 2838
What does one do with the toddler's shaved hair? Throw it, bury it or burn it?
The only quote about this I found so far was in ibn al-Arabi's al-Masaalik fir sharh Muwatta'a Maalik المسالك في شرح موطأ مالك -see here in Arabic-: This is my own translation take it carefully
واختلفَ العلّماءُ في وجوبِ تسميتها عقيقة: فحكى أبو عُبَيْد عن الأَصمَعِيّ وغيرِهِ: أنّ العقيقةَ الشَّعْر الّذي يكون على رأسِ المَوْلودِ، وإنما سُمَّيتِ الشَّاةُ الّتي تُذبح عنه عقيقة؛ لأنّه يُحلَق رَأسُه عند ذبحها وُيرمَى به، وكانتِ الجاهليَّةُ تفعلُه،
The scholars had differences on whether or not it is obligatory to call it 'aqeeqah: Abu 'Ubayd narrated from al-Asma'i and others: Al-'Aqeeqah is the hair which is on the head of the new born, and calling the sheep which is sacrificed for the child this was, is because it was usual to shave his hairs while slaughtering it and throwing it away, and this was done in Jahiliyah.
as a proof for this he cited a verse or poem of Imru' al-Qais a well known poet of the pre Islamic time.
This is part of ibn al-'Arabis comment on the chapter in al-Muwatta' starting with :
Yahya related to me from Zayd ibn Aslam from a man of the Banu Damra that his father said, "The Messenger of Allah, may Allah bless him and grant him peace, was asked about the Aqiqa. He said, 'I do not like disobedience (uquq),' as if he disliked the name. He said, 'If anyone has a child born to him, and wants to sacrifice for his child, then let him do it.' "
Which is often used as an evidence to reject the name 'Aqeeqah.
