Bitcoin Staking Protocol Babylon Hits $1.4 Billion in TVL
The platform enables users to lock their Bitcoin, gain validation rights on PoS chains, and earn yield in return.
The Babylon protocol, designed for Bitcoin staking, has recently reached a significant milestone, achieving $1.4 billion in Total Value Locked (TVL) after increasing its staking cap.
Babylon’s approach is similar to other restaking protocols such as EigenLayer, Symbiotic, and Karak, which operate on the Ethereum network. However, Babylon sets itself apart by planning to create its own blockchain and utilizing native Bitcoin as the primary asset to enhance security across multiple PoS networks.
Unlike previous sidechain efforts to integrate Bitcoin with smart contract platforms, Babylon allows Bitcoin holders to stake their assets directly without needing to bridge to other blockchains. This is made possible by leveraging Cosmos’s Inter-Blockchain Communication (IBC) protocol and various cryptographic methods.
When users stake their Bitcoin with Babylon, they maintain control of their assets. However, once staked, the Bitcoin becomes invisible in the wallet, as it is secured within a self-custodial Bitcoin Staking script that current wallets cannot recognize. Despite this, the control over the staking script remains entirely with the user, meaning that any transfer of funds can only occur with the user’s explicit approval.
The staked Bitcoin is used to secure other PoS blockchains, and in return, stakers receive rewards for contributing to network security. However, as with all PoS protocols, there is a risk of slashing.
Since Babylon does not have smart contracts, its design requires stakers to use their private keys to lock and unlock their stakes. They must then delegate these keys to a trusted validator for a fee. If a validator engages in misconduct, the staker’s private keys could be exposed, leading to the potential slashing of their stake.
Although the Babylon protocol is still in its testing phase, it has already attracted significant interest, with over 23,000 Bitcoins staked under this system.
Notably, while users can earn “points” for staking, the Babylon team has clearly stated on its website that there are no incentives for participation. They also emphasize that these points cannot be converted into tokens, and there are no promises of token issuance in the future.
Despite the lack of promised incentives, many users are optimistic about a potential airdrop. Babylon raised $70 million in its latest funding round in May, led by Paradigm and supported by Bullish Capital and Polychain Capital. Some of these funds are expected to be allocated to early contributors.