Babylon’s BTC staking Cap-3 kicks off very soon, on December 10, 2024, and the anticipation is high. The biggest cap so far, it is expected to bring about new opportunities for BTC stakers worldwide.
This feature sums up everything you need to know about why it’s important to stake BTC and how it works. It also refreshes the details on the upcoming Cap-3.
Why BTC Staking Is Important
Proof-of-stake blockchains have inferior economic security compared to Proof-of-Work blockchains like Bitcoin. Bitcoin, on the other hand, has superior security but usually sits idly in wallets, as staking is impossible in PoW. Babylon emerged as a win-win solution.
Here are some of the advantages of BTC staking via Babylon:
- The staking is non-custodial, which means that users do not waive control over their tokens
- There are new opportunities for liquid staking and restaking that enhance the benefits of staking while also massively improving the overall security
- Lots of institutional players come into the field, and so there is a vast selection of custodian services getting on board to cater to this new need, like Anchorage, Ceffu, Cobo, Fireblocks, or Hex Trust
How BTC Staking with Babylon Works
BTC staking, which once seemed virtually impossible, is now a reality. It works in a very elegant and thought-out way.
BTC is locked in a self-custodian vault through a staking transaction. It creates a UTXO (unspent transaction output) with two additional conditions: a timelock and a special extractable one-time signature (EOTS). The latter plays a crucial role in BTC staking.
The process itself boils down to the following:
- When you delegate BTC to a validator, you transfer the ownership of the EOTS to them.
- This ensures that the validator can participate in the staking process on your behalf while maintaining the stake’s proper security and resilience.
- After the confirmation, the EOTS is used as a secret key for validating the PoS chain where the staking occurs.
Stakers earn benefits and can either wait until the end of the staking period (which is defined by the timelock as mentioned above) or submit an unbonding transaction before that time and get their tokens and benefits back for a special unbonding fee.
The security of Babylon’s BTC staking protocol relies on the following:
- Slashing mechanism
- Staker liquidity
- Staker security
This means that everyone is incentivized to act honestly so that they don’t lose funds in a slashing transaction, and the unbonding does not require any social consensus and is at the sole discretion of the tokens’ owner.
Another important notion unique to Babylon is the finality module.
- It verifies votes from finality providers, special entities that have the final say in transaction processing.
- Blocks are finalized with sufficient votes based on BTC stake.
- Those votes, in turn, use EOTS and are verified through public randomness committed by the providers.
Currently, Babylon supports Cosmos-based blockchains, but plans to expand to other networks have already been announced. Everstake, as both a finality provider on Babylon and a prominent validator on many PoS blockchains, is doing its part to secure the entire ecosystem.
Why Stake BTC via Everstake
Staking BTC via Everstake, one of the most prominent staking providers and infrastructure solution developers in the Web3 scene, has numerous advantages.
- One of the lowest fees in the ecosystem at just 3%
- High-end security and industry-grade distributed infrastructure
- A dedicated BTC staking dashboard that massively simplifies the staking process
- Partnerships with top wallets and projects in the ecosystem
- A plethora of guides and educational materials
- Extensive communication with the community
- 24/7 support
Babylon Bitcoin Staking Cap-3 Details
Here are all the details you need to prepare for the upcoming kickoff of Cap-3.
- Duration: 1,000 BTC blocks or approximately one week
- The exact block heights are to be announced on December 7, 2024
- Minimum transaction: 0.005 BTC
- Maximum transaction: 5,000 BTC
- Unbonding transaction fee: 0.00032 BTC
- 100,000 points per block for the first 300 BTC blocks of Cap-3
- 21,000 points per block for the remaining 700 BTC blocks
- All points are allocated proportionally among all active stakes from all caps within the block
For more details on Babylon’s Phase-1, check out our detailed guide.
Note that, for legal reasons, points are not available in all jurisdictions, including the United States. Be sure to check whether your location or citizenship allows for receiving points according to the laws of your country of residence or your citizenship.
Be sure to read and accept all conditions on Babylon’s official website. We also recommend that you properly research Babylon’s documentation to fully comprehend all the details of BTC staking before you proceed with staking.If you have any questions about staking BTC in Cap-3, don’t hesitate to contact our community managers via X or Discord.
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