Babylon Innovation BTC Stake: No Bridge, No Accomplice, Opening a New Era of Bitcoin Ecology

Babylon, as an innovative Bitcoin staking solution, achieves the native staking of BTC layer assets through cryptographic technology. Its uniqueness lies in the fact that the staked Bitcoin does not leave the mainnet, and its security is still guaranteed by the PoW mechanism. The entire process operates completely based on the "extractable one-time signature" cryptographic method, without relying on any third-party bridges or custodians. This highly secure design has also earned recognition from the BTC community.

Babylon has opened up a new revenue path for Bitcoin holders, allowing them to earn staking rewards while ensuring security, creating a new track for BTC staking. This will not only change the way the BTC ecosystem operates but also address issues such as inflation and startup difficulties faced by small and medium-sized POS public chains.

The liquidity staking scheme for BTC is similar to a savings account, where users can deposit and withdraw at any time while earning interest. At the same time, liquidity staking tokens can also generate additional returns in other DeFi projects. In contrast, Babylon staking resembles a fixed deposit, offering higher returns but not allowing immediate withdrawals after deposit.

This innovation can also attract more non-Mainnet BTC users to participate, such as wBTC holders on Ethereum. Essentially, liquid staking can be seen as the project party borrowing users' BTC to stake in Babylon, paying users interest with the staking rewards, while also providing users with tradable bonds ( and liquid staking tokens ).

Currently, multiple projects are developing liquidity staking solutions based on Babylon:

pSTAKE adopts an institutional accomplice liquidity model, where user funds are staked to the pSTAKE address, supported by institutional liquidity. Its official token yBTC is expected to support earning returns in DeFi projects.

Lorenzo has implemented a principal and interest separation business similar to Pendle. After users send BTC to a multi-signature wallet, it is held by a staking agent, and they receive stBTC as a certificate. Lorenzo has issued three types of tokens: LPT( principal ), YAT( yield rights ), and SPT( redemption certificate ).

Lombard adopts a more decentralized approach, where user funds are directly staked to Babylon. The overall architecture consists of users, Bitcoin nodes, back-end, and a decentralized Consortium. Its official token LBTC can be used as collateral in DeFi.

Solv tokenizes the staking rewards from BTC Layer2, restaking rewards, and DeFi rewards from ETH Layer2 into SolvBTC, seamlessly integrating with various application protocols.

Bedrock was originally developed for the Eigenlayer ecosystem and is now commissioned by Babylon to develop the UniBTC protocol, supporting Ethereum users' wBTC stake.

Master Protocol serves as a yield aggregation platform, aggregating multiple BTC ecosystem projects. Its main products include Master Yield Market and LST Protocol.

Chakra is a ZK-driven shared modular Bitcoin settlement layer that provides unified settlement services for layer two networks. Its official token tlBTC can be used as a stake certificate, liquidity asset, and native asset for full-chain settlement.

Babylon's BTC staking is about to launch, which will bring significant changes to the BTC ecosystem. First, it will significantly increase the overall yield of BTC assets. Currently, the BTC interest market size exceeds 10 billion USD, with yields only ranging from 0.01% to 1.25%. In contrast, PoS blockchain staking rewards typically range from 5% to 20%, and staking BTC for other PoS chains could yield returns that are potentially tens of times greater than traditional BTC interest.

Although some in the BTC community still adhere to the principle of holding coins without action, the substantial increase in returns will attract more users to participate. As users gain profits from BTC and spill over into the BTC L2 ecosystem, a positive development cycle will be initiated.

However, the BTC staking led by Babylon is fundamentally different from ETH staking, as the BTC chain itself does not have native yields, more akin to the restaking business of eigenlayer. The related ecosystem may also be similar to the LRT protocol under eigenlayer.

Therefore, the monopoly pattern of giants emerging in ETH staking is unlikely to be repeated in BTC staking, and the motivation for exchanges to participate is also weaker, as scale effects will not bring more stable profits. This provides early projects in the BTC staking field with a first-mover advantage, and investors have the opportunity to achieve high returns from rapid growth.