Babylon Genesis is a Layer-1 blockchain that brings Bitcoin’s security to the Proof-of-Stake (PoS) ecosystem. It is built on the Cosmos SDK and CometBFT consensus engine. Babylon enables BTC holders to stake their assets directly, maintain self-custody, and participate in securing decentralized networks without the need for wrapped tokens or custodial bridges.
This article briefly overviews the tokenomics model in Babylon Genesis, including token allocation and governance.
What Is BABY?
The BABY token is the native utility and governance token of the Babylon Genesis ecosystem. It serves as the protocol’s economic backbone and enables participation, coordination, and incentive mechanisms that keep the network secure, decentralized, and adaptable.
At the most fundamental level, BABY tokens secure the Babylon Genesis blockchain. BABY holders stake their tokens with validators who produce blocks and validate transactions. In return, stakers receive rewards derived from inflation and transaction fees.
Staking also plays a defensive role. Validators and delegators are subject to slashing penalties if they behave maliciously or go offline.
BABY tokens give holders governance rights. This means that anyone holding and staking BABY can propose changes to the protocol and vote on them. These proposals might cover the following:
- Adjustments to inflation or reward distribution.
- Upgrades to the protocol or validator parameters.
- Allocation of funds from community or ecosystem treasuries.
- Changes in staking mechanisms or interoperability features.
Voting power is proportional to the amount of BABY staked, so those most invested in the network have the greatest influence. Still, delegation can amplify informed voices within the community.
Even though BTC is a separate asset and not native to Babylon, the BABY token rewards Bitcoin holders who participate in Babylon’s novel BTC staking system. When users delegate their BTC (via time-locked scripts) to Finality Providers, they help secure connected Proof-of-Stake chains and receive BABY in return. BABY is the incentive layer that makes this cross-chain security economically viable.
BABY is also used as gas, i.e., the token needed to pay for transactions on the Babylon Genesis network.
A significant portion of the total BABY supply is reserved for community and ecosystem incentives. These tokens will be used to:
- Bootstrap liquidity and usage on decentralized applications built on or secured by Babylon.
- Fund grants for developers building infrastructure, tools, and smart contracts.
- Reward community contributors, content creators, and governance delegates.
Token Allocation
The total supply of BABY tokens is 10 billion, distributed as follows.
| Allocation Category | Percentage | Token Amount (BABY) | Vesting Schedule |
| Early Private-Round Investors | 30.5% | 3.05 billion | 4-year vesting with a 1-year cliff |
| Team | 15% | 1.5 billion | 4-year vesting with a 1-year cliff |
| Advisors | 3.5% | 350 million | 4-year vesting with a 1-year cliff |
| Community Incentives | 15% | 1.5 billion | Unlocked at Genesis launch |
| Ecosystem Building | 18% | 1.8 billion | 3-year vesting with 25% unlocked at launch |
| R&D and Operations | 18% | 1.8 billion | 3-year vesting with 25% unlocked at launch |
Inflation and Dual Staking Model
Inflation in Babylon Genesis is a mechanism of rewarding participation and ensuring the network’s long-term sustainability.
- The initial inflation rate is set at 8% per year, based on the circulating supply of BABY tokens.
- This 8% is split 50/50 between:
- BTC stakers (those who delegate BTC to Finality Providers)
- BABY stakers (those who stake BABY tokens with validators)
- After Year 1, inflation will become adjustable through governance proposals.
- The community can vote to raise, lower, or stabilize inflation depending on the network’s needs. This way, inflation doesn’t remain static and can respond to real-world usage and economic factors.
Dual Staking Model: BTC + BABY
Babylon Genesis’s core innovation is the dual staking model. It allows both BTC and BABY token holders to participate in securing the network, something quite rare in the crypto space.
- BTC holders delegate their Bitcoin (without moving it from their wallets) to Finality Providers on the Babylon network.
- Finality Providers then secure checkpoints that help bridge Babylon’s consensus to other networks (especially Bitcoin-secured PoS chains).
- BTC remains in the user’s wallet or smart contract via a cryptographic system involving time locks, which preserves self-custody.
- BTC stakers receive BABY rewards for their participation.
In a nutshell, one can use their BTC to secure networks without wrapping or bridging and with no custody risks. Additionally, users receive BABY tokens for their participation.
👉 Curious how to stake BTC on Babylon? Check out our step-by-step BTC staking guide.
Once a user has BABY tokens, they can delegate them to validators on the Babylon Genesis blockchain who help run the network. The token holders are entitled to receive inflation rewards, a portion of transaction fees, and, once active, governance voting power.
Governance in Babylon Genesis
BABY token holders can influence the network’s progress through Babylon’s governance system. Any BABY holder can participate by either submitting proposals or voting on them. That said, a minimum deposit of BABY tokens is usually required to initiate one to prevent spam or low-quality proposals. This deposit is often refunded if the proposal is accepted and reaches a quorum, but it may be slashed if deemed malicious or frivolous.
Proposals can address topics ranging from technical upgrades and inflation rate adjustments to the allocation of ecosystem funds or changes in validator requirements. Once a proposal is submitted and enters the voting period, all BABY token holders can vote on it directly or delegate their voting power to a trusted validator or governance delegate. This way, passive holders or less technically inclined users can still have a say through someone they trust.
Voting power is proportional to the number of BABY tokens staked. The more tokens you stake, the more influence you have. Still, Babylon’s system encourages broad participation rather than allowing easy whale dominance.
Users usually discuss proposals in public forums, social channels, and through governance dashboards before they are formally submitted.
Conclusion
Babylon Genesis combines Bitcoin’s economic strength with the flexibility of Proof-of-Stake. Its dual staking model, strong governance framework, and thought-out tokenomics offer an efficient approach to ensuring decentralized network security.
Currently, Babylon Genesis is about to enter Phase 3, which will see the onboarding of additional networks, the introduction of EVM compatibility, and the creation of a BTC Liquidity Hub.
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