Babylon pioneers a new era of native BTC staking, leading the transformation of the Bitcoin ecosystem.

Babylon is an innovative non-custodial Bitcoin staking solution that achieves native staking of BTC layer assets through cryptography. It utilizes re-staking to provide POS security for other blockchains, thereby generating returns.

In Babylon staking, Bitcoin is always kept on the mainnet, secured by the PoW mechanism. The entire staking process is completely based on the cryptographic method known as "Extractable One-Time Signature EOTS", without relying on any third-party bridging or custody. This highly secure design has received wide recognition from the BTC community.

Babylon has opened a secure new way for Bitcoin holders to earn staking rewards, creating a new track for BTC staking, which is expected to fundamentally change the gameplay of the BTC ecosystem. At the same time, introducing BTC staking can also address issues such as inflation pressure and startup difficulties faced by small and medium-sized POS chains.

The BTC liquid staking program is similar to ETH's liquidity tokens, aiming to achieve a savings account function for BTC. Users can deposit and withdraw at any time while earning interest, and the liquid staking tokens can also earn additional yields in other DeFi projects. In contrast, staking on Babylon is more like a fixed deposit, offering higher returns but cannot be withdrawn at any time.

This solution can also attract more non-mainnet BTC users to participate, such as wBTC holders on Ethereum. Essentially, liquidity staking can be viewed as the project side borrowing users' BTC to stake in Babylon, using the staking rewards to pay users interest, while the bonds users obtain ( and the liquidity staking tokens ) can also be traded.

Currently, most Babylon liquidity staking tokens are built on Ethereum, with plans to support multi-chain in the future. Except for Lombard, other projects adopt a custodial model, where the project parties stake on behalf of users to Babylon, and liquidity is provided by third-party institutions.

A certain liquidity staking project adopts an institutional custody liquidity model. Users' funds are staked to the project’s designated address, and liquidity is supported by well-known institutional custody providers, while the project team stakes BTC to Babylon. The project plans to issue an official liquidity staking token, allowing users to earn additional rewards in other DeFi projects. Currently, the product is in the testing phase, with over 40,000 users participating in the testnet staking.

Another project has implemented a similar principal and interest separation business in the BTC liquidity scheme. Users send BTC to a multi-signature wallet, which is hosted by a trusted institution, and receive a staking certificate. The project then stakes the BTC with Babylon. The project issues three types of tokens: LPT, which represents the redeemable BTC principal, YAT, which represents the staking yield rights, and SPT, which is used for BTC redemption. Both LPT and YAT are tradable, creating arbitrage and investment opportunities for investors.

A certain project adopts a more decentralized solution, where user funds are directly staked to Babylon, rather than relying on third parties to provide liquidity. The overall architecture consists of users, Bitcoin nodes, back-end, and decentralized management components. The staking process is managed by decentralized components to ensure security. The liquid staking tokens issued by the project can be used across chains and are compatible with the DeFi ecosystem.

A certain aggregation platform integrates multiple BTC ecosystem projects, providing users with staking and trading services. Its main products include a yield trading market and a liquidity staking protocol. The yield trading market packages and splits the aggregated BTC ecosystem assets into principal and interest tokens for trading. The liquidity staking protocol aims to enhance the liquidity and yield of Bitcoin.

A ZK-driven modular settlement layer provides unified settlement services for layer two networks, building an aggregated liquidity and interoperability network. The issued staking certificates can be used as liquidity assets in the DeFi ecosystem to obtain additional returns, and serve as native assets for full-chain settlement.

Babylon's BTC staking is about to go live, which will bring a tremendous transformation to the BTC ecosystem. It will significantly increase the overall yield of BTC assets, potentially reaching dozens of times the traditional BTC yield. Although some in the BTC community prefer to hold their coins without moving, the substantial increase in yield will still attract a large number of users to participate, thus promoting the healthy development of the BTC ecosystem.

However, the BTC staking dominated by Babylon is essentially different from ETH staking and is more similar to cross-chain staking services. Therefore, it is unlikely that a monopoly pattern like that of ETH staking will emerge in the BTC staking field, and the motivation for exchanges to participate is also relatively weak. This provides early projects with an opportunity for rapid development, and investors can expect considerable returns from it.