Babylon's initial staking phase launched on August 22nd, quickly reaching its 1,000 BTC cap within three hours, temporarily causing a 500% spike in Bitcoin mainnet fees.
Key participants included BTC staking protocols like Solv, Lorenzo, and Bedrock. This article provides a brief overview of Babylon, explains BTC staking, and introduces the key BTC staking (LSD) protocols along with their unique features.
What is Babylon
Babylon is an innovative Bitcoin staking protocol designed to unlock the potential of 21 million dormant Bitcoins. By integrating Bitcoin into PoS protocols, Babylon enhances system security, significantly boosts operational efficiency, and mitigates centralization and single points of failure risks. This makes the overall blockchain network more secure and reliable.
With a staggering $96 million in funding from famous VCs, including Paradigm, Polychain, and Binance Labs, Babylon is well-positioned to execute its ambitious roadmap. The participation of these renowned investors signals their confidence in Babylon's ability to unlock the full potential of Bitcoin.
Babylon's Bitcoin Staking Mainnet Launch
On August 22nd, Babylon's mainnet went live, marking a pivotal moment in the evolution of Bitcoin. The initial staking phase was met with overwhelming demand, with the 1,000 BTC cap being reached in three hours.
To encourage wider participation and prevent domination by a few large entities, the protocol implemented a limit of 0.005 BTC per transaction.
Stakers who participated in this initial phase were rewarded with Babylon Points, which are distributed on a per-block basis. Stakers earned Babylon Points proportionally based on their staked amount. Each Bitcoin block generated 3,125 points, which were then distributed among all participants. However, this generous reward system was limited to the first 1,000 BTC staked. Future staking phases may see adjustments to the point distribution.
While venture capital backing played a role, the exclusive point rewards for the first 1,000 BTC were the primary driver of the staking frenzy. Despite the initial staking limit, users competed fiercely to secure their positions. Finally, over 12,700 users joined the staking pool.
Is Babylon Staking Secure?
Babylon has implemented a robust security framework to safeguard staked assets. The Covenant Committee, a group of highly reputable organizations, collectively oversees the security of the staking process. Utilizing a 6-of-9 multi-signature scheme, the committee ensures that no single entity can compromise the system. Members of the Covenant Committee include:
- AltLayer (1 key) – Rollup-as-a-Service provider
- Babylon Labs (3 keys) – The core development team behind the project
- CoinSummer Labs (1 key) – Affiliated with a top staking service provider (StakeFish) and a top mining pool (F2Pool)
- Cubist (1 key) – Secure staking infrastructure provider
- Informal Systems (1 key) – Cosmos ecosystem validator
- RockX (1 key) – PoS validator and liquid staking provider
- Zellic (1 key) – Security auditor
This decentralized approach significantly reduces the risk of unauthorized access or malicious attacks. To boost confidence, Babylon's smart contracts have undergone comprehensive audits by renowned security firms, such as Coinspect, Zellic, and Cantina. These industry leaders have meticulously examined the codebase, ensuring its robustness and resilience against potential vulnerabilities.
How to Join Babylon Bitcoin Staking Mainnet
According to the official documentation, the protocol will be rolled out in three sequential phases:
Phase 1: Bitcoin Locking
- The users' Bitcoin is locked without generating immediate rewards.
- No slashing risk during this phase.
- Users accumulate points instead of earning rewards.
- Default lock-up period is 15 months.
Phase 2: Bitcoin Staking Activation
- The Babylon PoS Chain is officially activated.
- The locked Bitcoin from Phase 1 provides economic security.
- Bitcoin timestamping protocol is enabled.
Phase 3: Bitcoin Multi-Staking Activation
- The final phase of Babylon's launch.
- The shared security market opens to other PoS systems.
- Any PoS system can leverage BTC staking to ensure security.
How to Stake BTC through LSD Protocols
While users can directly stake their BTC on the mainnet, the process can be complex and costly due to network congestion. Babylon liquid staking derivatives (LSDs) offer a more convenient solution, automating the staking process and potentially providing additional point rewards.
Bedrock
Bedrock, a protocol developed by the staking-focused team RockX, is a leading provider of liquid staking derivatives. With a strong track record in node operations and Ethereum staking, RockX has expanded its offerings to include BTC and other assets.
Backed by prominent investors such as OKX Venture, Comma3, and Longhash, as well as Babylon's CTO, Bedrock secured a substantial portion of the initial 1000 BTC staking allocation on Babylon, accounting for 29.7% of the total.
Solv Protocol
SolvBTC is the leading Bitcoin staking protocol that operates across both the Bitcoin and Ethereum ecosystems. Users can deposit their BTC on networks like Ethereum, BNB Chain, and Mantle to receive solvBTC. These tokens can then be staked to earn solvBTC.BBN.
With a substantial $11 million funding round from Binance Labs and other investors, Solv Protocol has quickly gained traction in the market. Its staking campaigns have consistently been oversubscribed, leading to multiple increases in the staking cap due to high demand.
SolvBTC is constantly improving and growing. The team is preparing to launch on the BOB Chain and is exploring the possibility of deploying on Soneium, a promising new public blockchain.
Lorenzo Protocol
Lorenzo aims to create a financial layer for Bitcoin liquidity, combining the best of Lido, Renzo, and Pendle. By staking BTC on Lorenzo, users can deposit into Babylon to earn PoS rewards. In return, they receive stBTC LST tokens and YAT reward tokens.
The first phase of Babylon's 250 BTC staking limit has been fully subscribed. Users who participated will share a pool of 1.5 million USD worth of YAT tokens and Lorenzo points.
Lorenzo's stBTC can be used as collateral on the Satoshi Protocol to mint the stablecoin SAT. This provides users with additional liquidity to access more yield opportunities while they accrue staking rewards.
Lombard Finance
Lombard Finance secured a substantial $16 million investment led by Polychain Capital in July. As the only LSD protocol backed by Babylon, Lombard has attracted a lineup of investors including OKX Ventures, Mirana, and Foresight Ventures. This makes it one of the most well-funded protocols in the BTC LSD ecosystem. Furthermore, Lombard currently boasts the highest amount of staked BTC among LSD protocols.
Through a partnership with Veda, Lombard has introduced a combined pool, allowing users to deposit LBTC into DeFi Vaults for additional rewards.
Pump BTC
Pump BTC specializes in Babylon staking and offers support for WBTC and FBTC on Ethereum, BNB Chain, and Mantle. The protocol has cultivated a thriving ecosystem, partnering with projects like Zircuit and Symbiotic, and has achieved a TVL of 300 BTC.
Pump BTC has ensured user convenience by providing ample liquidity on multiple decentralized exchanges, including Curve. The successful completion of its initial staking phase also highlights the protocol's technical excellence.
pStake Finance
Developed by Persistence, pStake is a veteran LSD protocol that has successfully stimulated liquidity on Cosmos. Users can join by linking their OKX wallets and staking BTC on the Bitcoin blockchain. The initial 50 BTC staking limit was quickly filled, and ultimately, users contributed 10 BTC to Babylon.
It's important to note that participating in BTC staking through an LSD protocol is different from directly participating in Babylon's first phase staking event. All the LSD protocols mentioned above collect users' BTC and then "stake on behalf of" the user when Babylon's mainnet staking is available.
Conclusion
The advent of the Babylon protocol marks a new era for the Bitcoin ecosystem. Through its innovative technical framework, Babylon not only offers Bitcoin holders more earning opportunities but also opens up new possibilities for the entire blockchain ecosystem.
As Babylon continues to evolve, we have every reason to believe that a more prosperous and diversified Bitcoin ecosystem is on the horizon. The success of Babylon will not only change the rules of the Bitcoin game but will also propel the entire blockchain ecosystem / consensus mechanism into a new era.
The Babylon is a promising beacon of the future, shaping the trajectory of the ecosystem and driving the entire blockchain world forward. We believe that with Babylon's growth, the prosperity of BTC Staking Protocol and related PoS chains is imminent. This is more than just a technological advancement; it's a comprehensive upgrade of the entire ecosystem.
About Satoshi Protocol
Satoshi Protocol is a revolutionary "universal" stablecoin protocol backed by Bitcoin. It allows users to deposit BTC/staked-BTC/ETH/USDC as collateral to mint the SAT stablecoin on both Bitcoin mainnet and multiple L2s.
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