Binance Labs, the venture capital and incubation arm of Binance has invested in Babylon, a Bitcoin staking protocol that supports the concept of native Bitcoin staking allowing users to stake bitcoins for PoS blockchains and earn yields without any third-party custody, bridge solutions or wrapping services.
It provides slashable economic security guarantees “to the PoS chains while ensuring efficient stake unbonding to enhance liquidity for Bitcoin holders.”
Historically, PoS chains have always “been tethered to their native assets for their underlying security.”
Bootstrapping security is challenging “for emerging chains due to the volatile price movements of a new token. High inflationary rewards are typically implemented and distributed to incentivize staking early on and this could lead to adverse economic effects for the token in the long run.”
Babylon’s Bitcoin Staking Protocol provides “a way for PoS chains to acquire staking capital from the largest crypto asset in the world instead of their native token thereby reducing PoS chain’s inflationary pressure and unlocking new utility for their tokens.”
Additionally, Bitcoin, despite “reaching a trillion-dollar market cap, has been serving as an idle store of value without much utility.”
Babylon’s innovation provides a new avenue for Bitcoin holders “to earn additional yields from PoS chains in a secure and decentralized way.”
Yi He, Co-Founder of Binance and Head of Binance Labs, commented:
“Bitcoin staking introduces a crucial new use case for the industry, marking a significant stride in the integration of Bitcoin with the Proof-of-Stake economy. Binance Labs’ investment in Babylon represents our commitment to supporting innovative projects leading the Bitcoin narrative and advancing its use cases.”
Built using the Cosmos SDK, Babylon chain “provides Bitcoin timestamping services to PoS chains and acts as a control plane to synchronize between the Bitcoin network and the PoS chains. It is responsible for the facilitation of BTC staking, finality round participation, and tracking of validator staking information, ultimately acting as a channel between Bitcoin’s PoW world and PoS chains.”
The protocol is led by “a team of consensus protocol researchers and experienced Layer-1 engineers.”
The foundation of Babylon is based “on the accumulated research and synthesis of ideas around PoW and PoS consensus.”
David Tse, Co-Founder of Babylon, said:
“The Bitcoin staking protocol unifies the entire blockchain industry, from Bitcoin to the PoS world. We are thrilled to have the support of Binance Labs in building such a broad-based Babylon ecosystem.”