Babylon’s Bitcoin staking protocol is one of the few innovations designed to unlock the hundreds of billions of dollars in idle capital held in BTC.
This Bitcoin staking protocol does so by introducing a modular and scalable two-sided market whereby Bitcoin holders can securely lock their BTC and choose a Proof-of-Stake (PoS) chain to stake and earn yields; on the other hand, PoS chains and DApps looking for more capital to secure their ecosystems can opt-in to bitcoin-backed security to enjoy higher security, healthy economics and broader adoption.
So, what is the technology behind this Bitcoin staking protocol, and how can BTC holders get involved?
Babylon leverages advanced cryptographic technologies such as extract one-time signature (EOTS) and Bitcoin’s native time-lock. EOTS allows this Bitcoin staking protocol to convert slashable PoS attacks to spendable Bitcoin UTXOs for burning while Bitcoin’s native timestamping facilitates fast unbonding. More importantly, the staking is done directly on the Bitcoin network.
As of writing, a total of 36,041.10 BTC has been restaked through Babylon Bitcoin staking protocol, with the last week recording a 51% jump in the total value locked (TVL).
1. Crypto Exchanges
One of the easiest ways to stake BTC through Bablyon’s Bitcoin staking protocol is through a crypto exchange like Bitrue.
The two recently partnered to introduce a dual rewards program, making it seamless for Bitrue exchange users to stake their BTC. This dual rewards mechanism includes Babylon points which are akin to loyalty incentives on popular PoS chains such as Solana and Ethereum; the second type of reward and perhaps the most important is an APR that could go up to 2.3% on the staked BTC.
The rewards distribution is done on a daily basis, starting from the T+2 day while unbonding requests are fully unbound by the T+8 day.
It is also important to note that Bitcoin holders who stake via Bitrue do so directly on the Bitcoin network. This means retaining full control over their assets, further contributing to the security and decentralization of the Bitcoin blockchain and Layer 2 solutions that rely on Bitcoin, while maximizing the opportunity to earn real yield rewards from idle BTC.
“Through our collaboration with Babylon Labs, we’re bringing dual-reward systems to life, enabling Bitrue users to maximize their holdings while securing the Bitcoin ecosystem and beyond.” – Adam O’Neill, Chief Marketing Officer at Bitrue.
2. DeFi Protocols
Another simple way to stake Bitcoin through Babylon is via DeFi protocols such as Lombard and Solv protocol. Currently, a combined total of over $2 billion worth of BTC has been staked on Babylon through these two DeFi protocols.
Lombard’s flagship product, the LST token (LBTC), is built on top of the Babylon Bitcoin staking protocol. It is designed to enable users to provide economic security to PoS networks via Babylon and participate in other DeFi activities, all while maintaining the value of the original asset. Notably, LBTC can also be minted across other native blockchains, giving users the flexibility to move their assets across several chains.
Solv protocol also functions in almost similar manner; however, this DeFi protocol features a universal Bitcoin reserve token dubbed SolvBTC. This token grants users access to multiple Bitcoin Liquid Staking Tokens (LSTs) and chains, including Babylon’s Bitcoin staking protocol, Ethereum, BNB Chain, Avalanche and Arbitrum.
Bitcoin holders who are interested in exploring more avenues of DeFi yields are best suited to use these protocols given the broad access they provide to users.
3. Institutional Crypto Service Providers
For larger organizations or entities that are looking for established players in the Bitcoin space, there are quite a number of crypto institutional service providers that are offering BTC staking services on Babylon.
These include the likes of Anchorage Digital which has already facilitated the staking of 94.89 BTC as of writing. Other notable firms in this category are Kiln which specializes in enterprise grade staking services, Hex Trust (a digital asset custodian) and Blockdaemon.
It is also worth mentioning that unlike DeFi protocols which are mostly self-custody, these institutional crypto service providers often hold BTC on behalf of their clients hence their suitability towards firms or companies which are seeking to avoid the hassle of on-chain operations or regulatory hurdles.
Conclusion
Bitcoin’s market cap is almost eclipsing the $2 trillion mark, yet a leading staking platform like Babylon only enjoys a market share of $3.6 billion. What this means is that there’s still a lot of untapped idle capital that could be put to use in the larger crypto ecosystem.
On the brighter side, it is now more seamless for individuals and institutions to stake their BTC through the avenues mentioned in this article, among others. It is more likely that in the near future Bitcoin staking will become more mainstream given the infrastructures being built to address issues such as security and better incentives to attract BTC holders who initially preferred to simply accumulate value by holding alone.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
