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What is Babylon Chain? The First Bitcoin Staking Protocol
06/10/2024

What is Babylon Chain? The First Bitcoin Staking Protocol

06/10/2024
4,5

Babylon Chain is the first Bitcoin staking solution, which enables Bitcoin holders to safely earn yields without intermediaries. Read our article to learn more about the protocol and how to qualify for a potential airdrop.

What is the Babylon Chain?

Babylon is a protocol built on Cosmos SDK that enables Bitcoin holders to stake their Bitcoins directly on the Bitcoin network without third parties. This allows Bitcoin ecosystem users to increase the productivity of their holdings by staking BTC, which contributes to the security of PoS networks. As the total staked value increases, the security of these networks also grows, providing yields to BTC stakers.

Unlike traditional solutions that depend on new layers or ecosystems built atop Bitcoin, Babylon makes use of the inherent security of the Bitcoin chain and shares it with other PoS networks such as Cosmos, Binance Smart Chain, Polkadot, and Polygon. This approach avoids the need for bridges, custodians, or wrapping of assets, establishing a direct and secure linkage to these networks.

The Bitcoin network itself is limited by its inability to execute complex contracts, support various digital assets, or generate yield, restricting users mostly to holding or transferring assets. Although recent developments like BTC Layer 2 solutions show potential, they often depend heavily on third-party trust, involving custodians and multisig bridge.

How Does Babylon Work?

Babylon's Bitcoin staking protocol establishes a dual-market system and serves as the market's management layer. Bitcoin owners can securely lock their bitcoins and select which PoS chain(s) they wish to stake on, earning yields in the process. PoS chains and decentralized applications (dApps) can choose to enhance their security through Bitcoin backing, benefiting from improved security, robust economics, and increased adoption. The protocol's modular design allows it to secure any PoS chain and supports scalable re-staking for Bitcoin holders.

Source & Copyright: Babylon Chain Litepaper 

Babylon has a special protocol that makes it possible to avoid transferring bitcoins to a different network and maintains critical records from both sides. Here are some key features of Babylon:

Users can lock their bitcoins within a contract on the Bitcoin chain and leverage them to validate transactions on proof-of-stake networks.
The essence of PoS security lies in the capability to slash stakes if stakers attempt to compromise the PoS chain. Babylon can identify and penalize any dishonest behavior on the proof-of-stake network by exposing the private keys of offenders and destroying their bitcoins, enhancing network trust and security.

Bitcoin stakers can withdraw their funds at any time, provided they remain compliant. This eliminates the need for long waits or dependence on third-party approvals, making staking more user-friendly and adaptable.

Babylon is compatible with any proof-of-stake network that employs a Byzantine Fault Tolerance (BFT) consensus protocol, such as Tendermint, Casper, or GRANDPA. It does not alter the original protocols but enhances them with an additional layer of security.

Babylon’s Investments 

Babylon has raised $70 million in recent financing led by Paradigm. Other contributors included Bullish Capital, Polychain Capital, Hashkey Capital, Mantle, Galaxy, and Hack VC.

 

Previously, Binance Labs, the venture section of the cryptocurrency exchange Binance, invested an amount that was not disclosed in Babylon on February 28. Just the day before, the platform had launched its public testnet, offering rewards like NFT passes.

Additionally, Polychain Capital and Hack VC led a Series A funding round in December 2023, where Babylon managed to raise $18 million.

Babylon Testnet: How To Earn a Chance to Get an Airdrop?

Babylon announced the Testnet-4 on Tuesday, May 28, 2024. This iteration of the testnet is designed to enhance the security of staked Signet Bitcoin by enabling users to interact with the Signet BTC test network—a network that operates in parallel to the main Bitcoin chain.

Participants in this testnet have the opportunity to qualify for potential airdrops and rewards. To participate, simply follow the provided step-by-step instructions and keep track of task updates and statuses. Your active engagement could make you eligible to receive part of the Babylon Airdrop.

For this testnet, you need one of the following wallets: OKX, Tomo, OneKey, Bitget, or Keystone. 

To begin, join the Babylon Discord, then request test tokens (sBTC) from the faucet-signet-btc channel. 



Once you have your testnet tokens, connect your wallet to the Signet BTC network on the website.

Once connected, select any validator from the list and stake your desired amount of sBTC.

In addition to the testnet activities, Babylon has also launched a campaign on Galxe. To participate:

  • Visit Galxe and connect your wallet or social media account.
  • Engage in tasks to accumulate points and earn rewards.

Optional: Setting Up a Babylon Node

Setting up a node on the Babylon network might be complex because it needs some knowledge of coding and requires resources since the node must be operational 24/7, plus it will also cost you some money. It is important for nodes to be active all the time, as projects usually do not offer rewards to nodes that are inactive or not selected as validators. However, the potential rewards can be considerable. for more info, read the Docs

Final Words 

Babylon Chain is at the leading edge in integrating Bitcoin's strong security into the decentralized finance space. Its special staking protocol not only expands Bitcoin's usefulness beyond simply being a store of value but also strengthens the security of PoS blockchains. This places Babylon as a strong competitor against platforms like Ethereum and the restaking platform EigenLayer. By distributing Bitcoin's solid security features across different blockchains and applications, Babylon seeks to explore more uses for Bitcoin within the larger blockchain ecosystem.

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The materials found on the Cryptonica website shall not be taken as individual investment recommendations. The financial instruments or operations mentioned therein may not align with your investment profile or objectives. We assume no responsibility for any missing facts or inaccurate information in the texts. Cryptocurrencies are financial assets with high risk and volatility. Therefore, it is crucial that you conduct your own research on financial instruments and make independent decisions. Before engaging in any actions related to cryptocurrency, you shall study, understand, and comply with the laws applicable in your region and country.

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