In 2024, the Babylon Bitcoin staking protocol redefined possibilities for Bitcoin holders, and Everstake was there every step of the way, connecting users to this innovation. From testnet to mainnet, we witnessed firsthand how Babylon unlocked Bitcoin’s potential to secure Proof-of-Stake (PoS) networks while generating rewards for its holders.
All the hard work brought impressive results, all of which you will find in this Babylon Annual Report.
What’s Covered:
- Babylon Testnet Phase
- Mainnet Lunch: Phase 1
- The Role of Finality Providers
- Key Partnerships
- What’s Ahead for Babylon
Until the Babylon protocol debuted, BTC holders had limited options for utilizing their idle Bitcoin capital – primarily HODLing, sending, or bridging to other blockchains. Babylon’s protocol changed the game. It introduced trustless Bitcoin staking, allowing BTC holders to earn rewards while contributing to PoS network security—all without losing custody of their Bitcoin.
Beyond staking, this protocol opens doors to further innovations in decentralized finance (DeFi). For instance, users can potentially leverage staked bitcoin as collateral for loans, liquidity provisioning, or participating in governance across various ecosystems. By integrating Bitcoin more deeply into the PoS ecosystem, Babylon transforms BTC from a passive asset into an active force driving blockchain security and financial activity.
Babylon Testnet Phase
The Babylon Bitcoin Staking Testnet officially opened for the public on February 28, 2024, marking the start of the Bitcoin Renaissance. The core feature of the Babylon protocol is its trustless design. You don’t need to take any extra steps with your BTC, such as bridging, wrapping, using third-party custody, providing altcoin collateral, or relying on oracles to stake the asset. This eliminates counterparty risks, making true trustless Bitcoin staking a reality.
Key Testnet Features
- Bitcoin Staking: The testnet introduced staking as a feature, including stake delegation, on-demand unstaking, and partial slashing.
- Bitcoin Staking Web App: Launched a user-friendly web app for non-technical Bitcoin holders, doubling as a reference for service providers.
- Bitcoin Timestamping: Enabled secure cross-chain timestamping to protect PoS networks from long-range attacks and reduce unbonding time to just one day.
- CosmWasm Runtime: Empowered developers to build dApps and rollups with Wasm smart contracts secured by Bitcoin.
- Testing Staked Signet Bitcoin: Allowed participants to explore Bitcoin staking via the Signet BTC network without requiring PoS integration.
Mainnet Launch: Phase 1 Milestones
Babylon’s mainnet launched in 2024 with Phase-1, designed to maximize adoption and scalability. Phases 2 and 3 are planned for 2025.
Phase-1: Bitcoin Locking
On August 22, 2024, Babylon introduced a secure, self-custodial Bitcoin staking script. Stakers could lock their BTC for up to 64,000 blocks (~15 months) and unbond within 1,008 blocks (~7 days).
Key Metrics
- Cap 1: Limited to 1,000 BTC, demand exceeded expectations, reaching capacity within 74 minutes with 12,720 stakers.
- Cap 2: Duration-based, lasting 10 BTC blocks (~100 minutes). Almost 23,000 BTC were staked by 12,590 stakers.
- Cap 3: A longer duration (1,000 blocks, ~1 week) allowed broader participation, adding 33,399 BTC from 109,980 stakers. The greatest mystery Cap-3 left is who is an anonymous staker who staked 10,000 BTC in three transactions.
By the end of Phase-1, Babylon achieved:
- Total BTC Staked (TVL): 57,290.61 BTC ($6 billion), or 0.3% of Bitcoin is staked with Babylon. More insights are available in the article.
- Staking Participation: 135,290 stakers across retail and institutional users.
The visualization of Phase-1 provides a clear breakdown of the three caps in Babylon Mainnet Phase 1, highlighting the engagement levels and staking activity: Stakers (Left Chart) and Total BTC Staked (Right Chart).
The Phase-1 stakers occupy a wide spectrum, from small to big Bitcoin holders. This indicates a potential consensus in entering the altcoin universe.
Phase-2: Bitcoin Staking Activation
In Phase 2, which is planned to go live in Q1 2025, Babylon Chain will officially launch as the first Bitcoin-secured network (BSN) to leverage the Bitcoin locked during Phase 1.
This phase will also introduce the marketplace. Once live, finality providers with sufficient BTC delegations from Phase 1 will strengthen the security of Babylon’s PoS chain by determining the finality of its blocks.
Phase-3: Bitcoin Multi-Staking Activation
Babylon aims to create a shared security marketplace where BTC can be staked across multiple PoS systems simultaneously, generating rewards for stakers from multiple networks.
Finality Providers: Securing PoS Consensus
Finality Providers play a key role in voting during the finality round on top of CometBFT. Just like native PoS validators, they can receive voting power delegations from BTC stakers and earn commissions from staking rewards.
Operating as a Finality Provider doesn’t require specialized hardware, and the toolset includes three main components:
- Babylon Full Node: This connects to the Babylon network. While not mandatory, running your own node enhances security compared to relying on third-party RPC nodes.
- Extractable One-Time Signature (EOTS) Manager: A daemon that securely stores the provider’s private key and generates extractable one-time signatures.
- Finality Provider Daemon: This manages the Finality Provider’s operations. It works with the EOTS manager to produce public randomness and finality votes for Babylon blocks, which are then submitted to the network via the node connection.
This setup ensures finality providers can operate efficiently while maintaining high-security standards.
Key Collaborations
Collaborations are crucial for the development and growth of Babylon because they help expand the reach and adoption of its Bitcoin staking protocol across different platforms and ecosystems. Babylon’s success in 2024 was bolstered by strategic collaborations with wallets, exchanges, custodians, and blockchain networks, including:
- Anchorage Digital: A leading digital asset platform, Anchorage Digital supported BTC staking access for Babylon’s Cap-3, enhancing institutional participation within the ecosystem.
- Sui Network: A Layer-1 blockchain and smart contract platform that plans to integrate with the Babylon Bitcoin staking protocol, Lombard, and Cubist to bring Bitcoin into its DeFi ecosystem, broadening the utility of BTC within the Sui blockchain.
- Leap Wallet: The first Cosmos wallet to enable BTC staking, Leap Wallet integrated the Babylon protocol, providing users with multi-chain capabilities across Bitcoin, Ethereum, and other ecosystems.
- Hex Trust: A fully licensed digital asset provider, Hex Trust integrated the Babylon Bitcoin staking protocol to offer custody, trading, and staking services for institutional clients while ensuring private key security.
- SatLayer: Advanced Bitcoin staking and restaking capabilities by creating opportunities for enhanced liquidity, shared security, and capital efficiency across blockchains and infrastructure.
- Ceffu: A digital asset custody platform, Ceffu incorporated the Babylon protocol to allow institutional clients to stake Bitcoin securely through its Co-sign Wallet solution, enabling reward generation while maintaining control over assets.
- OKX Wallet: Integrated Babylon Bitcoin staking to provide users with direct access to staking services through its decentralized Web3 wallet.
- Bitcoin Suisse: The first Swiss-based crypto service provider to support Babylon Bitcoin staking, offering clients a secure way to earn rewards on their BTC holdings.
Looking Ahead to 2025
Babylon is set to build on its momentum with ambitious plans for 2025. The launch of Babylonchain, an L1 blockchain and the first network to receive Bitcoin-backed security, in Q1 marks the beginning of Phase-2, unlocking new possibilities for Bitcoin holders.
It enables Bitcoin holders to stake their BTC directly, contributing to the security of Proof-of-Stake (PoS) networks. By leveraging Bitcoin’s robust security, Babylon enhances the crypto-economic foundation of PoS blockchains and decentralized applications.
The Babylon Bitcoin staking protocol and Babylonchain aim to provide a secure, decentralized staking experience with rewards tied to supporting network security. With its phased rollout and strong collaborations, Babylon continues to expand Bitcoin’s utility beyond a store of value to a driver of blockchain innovation.
Learn more about Babylon here. Discover the Babylon Ecosystem Landscape.
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