Powering the $1T+ Bitcoin Economy: Babylon’s Bitcoin Staking Revolution

TLDR

• Babylon brings utility to the $1T+ BTC ecosystem through Bitcoin Staking. This enhances PoS network security by allowing Bitcoin users to stake BTC, boosting network security and earning yield, all while maintaining self-custody of their Bitcoins.
• Bitcoin Staking complements Babylon’s Bitcoin Timestamping, which sends critical consensus data to the Bitcoin network, reducing the risk of long-range attacks and reducing a network’s unstaking period to only a few hours.
• Numerous high-profile collaborations have already been established. This includes 20+ Bitcoin Staking protocol testnet integrations, and established collaborations with the Cosmos ecosystem, AltLayer, Polygon and Bitcoin Layer 2s.
• With significant demand from both the Bitcoin ecosystem and PoS systems, Babylon is well poised for significant growth.

Introduction

The Bitcoin network is inherently limited by its lack of smart contract functionality, including the inability to execute complex contracts, support other digital assets, or generate yield. Instead, users may only hold or transfer assets. Recent developments such as BTC L2s show a promising future, but most are constrained by their trust reliance on third parties like custodians and multisig bridges.

Babylon’s Bitcoin Staking plays a crucial role in this infrastructure development by allowing Bitcoin ecosystem users to stake BTC and in turn lend security to PoS networks. PoS network security grows with total staked value, so BTC stakers contribute to increased security by boosting the total stake and receiving yield in return. This is all done without the need for third-party custody, bridging, or wrapping, and can easily integrate with PoS systems of varying parameters.

There is already tremendous demand from both the Bitcoin ecosystem and PoS systems. Many high-profile collaborations have already formed, and Babylon is well-poised to grow its TVL significantly. We’ll expand on this below.

Bitcoin Yield

PoS systems often face the challenge of bootstrapping security, which necessitates attracting validators to purchase and stake their native asset. The risk is heightened for newer PoS networks due to their lower staked value, making them more vulnerable to attacks. By strategically restaking native BTC, the Bitcoin ecosystem can significantly boost the total value staked, serving as key security infrastructure for all PoS networks.

PoS systems also benefit from Babylon’s Bitcoin Timestamping, which enables them to send timestamps containing critical consensus data to the Bitcoin network. This feature significantly mitigates the risk of long-range attacks by hindering attempts to modify historical records, and greatly reduces the stake unbonding period, shortening it from approximately 21 days to mere hours. Bitcoin Timestamping also lays the foundation for Bitcoin staking by ensuring synchronized data flow between PoS networks and Bitcoin.

There is already deep interest in Babylon. Osmosis, a leading decentralized exchange in the Cosmos ecosystem, has agreed via governance vote to integrate with Babylon, with a significant majority of 92.1% in favor. This also acts as a building block for BTC staking integration, as it provides data synchronization between PoS networks and Bitcoin. Beyond this, 50+ Cosmos zones have integrated with Babylon’s timestamping protocol, with top networks including Injective, Sei, Kava, Mars Protocol, and more.

What’s Next?

Beyond existing integrations, we believe that traction will only continue to accelerate. In particular, there are two strategic alignments that position Babylon well:

• Cosmos Networks: The Cosmos Hub recently proposed the integration of Babylon’s Bitcoin staking protocol within the Cosmos ecosystem, enabling Bitcoin holders to stake their BTC and secure the Cosmos Hub ICS consumer chains which boast a combined $2.5 billion worth of staked assets. Beyond this, Babylon has already integrated with 50+ Cosmos-based blockchains with plans to integrate many more. The network already has 94+ independent chains with a gross market capitalization of $75B+, indicating significant growth potential for Babylon.
• AltLayer: AltLayer, a restaked rollup-as-a-service protocol, recently announced a strategic collaboration with Babylon to offer decentralized verification for BTC-protected rollups. BTC can be extended as collateral for the rollups, providing security for anything requiring verification, such as asset transfers across Proof of Stake networks. AltLayer has already reached a fully diluted market cap of $5B and this collaboration has significant potential given the number of rollups that will leverage AltLayer’s staking infrastructure.

Bitcoin Layer 2s also show immense promise for Babylon. They are rapidly emerging, finding innovative ways to tap into the $1T+ Bitcoin ecosystem. Two projects that have already begun implementing Babylon’s Bitcoin Staking are Lorenzo and Bison.

• Lorenzo is building a modular Bitcoin L2 architecture that includes a no-code Bitcoin L2-as-a-Service platform. They leverage Babylon’s Bitcoin Staking for various purposes, including providing any Lorenzo-based rollup with the ability to stake BTC for yield, the integration of native BTC assets, and the storage of critical asset data.
• Bison is a ZK-STARK rollup on Bitcoin that introduces general programmability, including the ability to create dApps, smart contracts, and financial tools. Bison introduces Bitcoin-native smart contract functionalities and uses Babylon to benefit from faster transaction speeds and enhanced security.
• Nubit is a Bitcoin-native data availability layer powering applications like Ordinals, Bitcoin Layer 2s, price oracles, and more. Nubit will use Babylon’s Bitcoin staking and timestamping protocols to secure its system, inheriting its Bitcoin-grade security.

All three projects can also use Babylon as a data availability (DA) layer to increase the efficiency of data publishing to the L1, holding significant promise as the Bitcoin Layer 2 ecosystem begins to quickly emerge.

Bitcoin Renaissance, February 29, 2024

Babylon is also pleased to have co-organized Bitcoin Renaissance, a successful full day Ethereum Denver event that covered the latest advancements in the Bitcoin ecosystem, including speeches from top minds in the space:

• David Tse, Co-founder, Babylon
• Nic Carter, Founding Partner, Castle Island
• Sunny Aggarwal, Co-founder, Osmosis
• Sandeep Naliwai, Co-founder, Polygon
• Muneeb Ali, Founder, Stacks, CEO, Trust Machines

Babylon’s Founder David Tse gave a speech focused on the ability of Bitcoin holders to now earn yield without selling their Bitcoin through staking opportunities, as well as noteworthy collaborations such as with the Cosmos ecosystem. He also covered how this can be done through Babylon’s trustless Bitcoin staking protocol, allowing holders to earn a yield on their Bitcoin while increasing the utility and robustness of Bitcoin’s security properties. This is especially relevant given that its self-custody nature differentiates it from other custodial solutions. 

Overall, the Bitcoin Renaissance event highlighted how vital collaboration and interoperability among networks and systems will be for propelling