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Following the successful launch of Babylon's Bitcoin Staking Testnet-4 on May 28, Blockdaemon is excited to support Babylon’s upcoming mainnet launch as a finality provider. 

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There have been over 450K delegations, with more than 343K stakers on the Signet BTC test network, highlighting the interest in Babylon. 

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As we approach the mainnet launch, it’s important for our customers to understand an overview of the staking details and benefits of Babylon’s protocol. This blog post will act as a primer, providing essential insights into how Babylon's staking protocol can enhance the security and utility of Bitcoin within the ecosystem, as well as secure rewards for institutional stakers. 

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What is Babylon? 

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Proof-of-Stake (PoS) chains require expensive capital for security. Bitcoin, a $1T+ billion asset, mostly sits idle. Babylon's protocol allows Bitcoin holders to stake their BTC to secure PoS chains and secure rewards, trustlessly, and without bridging. 

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This protocol offers full slashable security guarantees, supports fast unbonding, and works with various PoS consensus algorithms. It scales to many stakers and PoS chains, with a Bitcoin-staked Babylon Chain synchronizing between Bitcoin and PoS chains. This integrates Bitcoin with the PoS economy.

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Timestamping

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Babylon shares Bitcoin’s security with PoS chains through timestamping. 

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Timestamping allows hashes and signatures of PoS blocks to be submitted as transactions and recorded on the Bitcoin chain, a concept pioneered by Babylon Co-founder David Tse. Once confirmed, this transaction embeds an immutable timestamp into the Bitcoin blockchain.

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By anchoring PoS chain data to Bitcoin, Babylon ensures the data inherits Bitcoin’s security and immutability. This process makes it significantly harder for malicious actors to alter or manipulate the data. Users can verify timestamps against the Bitcoin blockchain, adding an extra layer of legitimacy. In case of an attack or fork, PoS chains can revert to these secure checkpoints, making attacks more economically expensive and less likely to succeed.

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The Babylon team has designed a secure Bitcoin timestamping protocol and implemented it as a Cosmos-SDK based Babylon chain. This chain enables efficient timestamp aggregation for any number of Cosmos SDK chains via the standard IBC (inter-blockchain communication) protocol. Since its launch in February 2023, the Babylon testnet has integrated with over 31 Cosmos SDK chains via. the IBC. Today, there are over 80 Cosmos chains that support IBC, creating a wide market for Babylon’s services. 

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Key Properties of Babylon's BTC Staking Protocol

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Babylon's BTC staking protocol has a number of key properties:

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1. Trustless and Self-Custodial: The Babylon staking process does not require bridging, wrapping, third-party custody, multi-sig, or oracles. It is, by default, entirely self-custodial and trustless. 
2. Delegatable Voting Power: Stakers can delegate their voting power, a common feature in Delegated PoS (DPoS) protocols.
3. Stake Security: Bitcoin is slashed only if the BTC staker (or their delegator) acts maliciously. Even if the Babylon chain is compromised, the Bitcoin stake remains secure as long as the staker or delegator is not malicious.
4. Fractional Slashing: The protocol can be configured to slash only a fraction of the staked Bitcoin during a slashing event, with the rest returned to the staker.
5. On-Demand Unbonding: BTC stakers can withdraw from staking with an unbonding delay, allowing flexibility and improved liquidity.
6. Atomic Slashing: If a delegator is slashed, all delegators of the same delegator including the delegator's self-delegation, will be subject to slashing. This prevents the delegator from selectively harming any specific delegator.
7. Restakable (WIP): The protocol aims to allow the same Bitcoin to be staked to secure multiple PoS chains, generating multiple PoS rewards.

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Why Stake with Blockdaemon?

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A Bitcoin Staker can send a staking transaction from any UTXO, including those owned by multi-sig/MPC/threshold accounts. The staker serves as the controller and beneficiary of the stake after its creation. The finality provider, such as Blockdaemon, is an entity that votes in the finality round to provide security assurance to the PoS chain, and Bitcoin Stakers can delegate their voting power to a specific finality provider.

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By choosing to stake with Blockdaemon, bitcoin holders can participate in staking, validate transactions, and generate rewards while minimizing the risk of slashing and benefiting from Blockdaemon’s comprehensive slashing guarantee policy.

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Conclusion 

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By leveraging Bitcoin's security as the premiere cryptocurrency, Babylon's BTC staking protocol provides robust economic benefits for PoS chains while allowing bitcoin holders to secure rewards without third-party risks. This approach ensures that holders’ bitcoin remains a secure, decentralized asset while contributing to the broader blockchain ecosystem.

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To enquire about Babylon staking with Blockdaemon upon mainnet launch, book a call with the team today. 

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