Since our last update on Babylon several months ago, the project has demonstrated remarkable growth. Its Total Value Locked (TVL) has surged from $1.4 billion to $5.4 billion, peaking at over $6 billion. This impressive expansion highlights an unprecedented demand for Bitcoin restaking.

Inspired by the success of Eigenlayer, Babylon is the first protocol of its kind to integrate Bitcoin into the Proof-of-Stake (PoS) ecosystem. The protocol establishes a two-sided marketplace where Bitcoin holders can securely lock their assets to earn yields. On one side of the marketplace are PoS chains that require additional security and are willing to reward Bitcoin holders for their contributions. On the other side, there are Bitcoin holders seeking to earn passive income on their BTC. The Babylon protocol ensures mutual benefit for both parties.

Currently, the project is completing Phase 1 of its development. The primary objective of Phase 1 is to successfully bootstrap one side of its system—the Bitcoin supply. Babylon has been steadily accumulating TVL by gradually raising deposit caps. The most recent cap for Bitcoin deposits was reached quickly, and the protocol now boasts over 57,000 BTC staked within its vault.

Deposits are presently limited, but they likely would have been significantly higher if no cap had been imposed. The project has attracted over 140,000 unique depositors, with some whales contributing massive amounts. For instance, one wallet, possibly linked to Justin Sun, deposited 10,000 BTC (~ $1 billion) into the protocol.

The launch of Babylon has also spurred the development of liquid staking solutions around the project. Most of the TVL deposited into Babylon has come through liquid staking protocols, which enable users to trade synthetic BTC on the Ethereum blockchain. For example, over 23,000 BTC have been staked through Lombard LST, allowing users to trade LBTC. In fact, the supply of LBTC has now surpassed that of Coinbase’s synthetic BTC token, cbBTC.

The anticipation of a potential airdrop partly drives the protocol’s high appeal among BTC holders. Many stakers are speculating that rewards will be distributed for staking BTC with Babylon, and an airdrop might be on the horizon.

Following the completion of Phase 1, Babylon will transition to Phase 2 of its roadmap. This phase will involve the launch of the Babylon chain itself, which is expected to further enhance the protocol’s capabilities. While the project has not explicitly confirmed an airdrop, it is widely speculated that the launch of the chain will coincide with the introduction of a native token.

Phase 2, expected to launch in Q1 2025, will be a key milestone as the project enhances its functionality and strengthens its position in the Bitcoin DeFi Space. 

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