A Brief Discussion on the Flourishing BTC Staking Ecosystem

Ritu13

Discussing the Emerging BTC Staking Ecosystem

Restaking is a process of repeatedly staking tokens on the main network to support the operations of other blockchain networks. Additionally, Restaking offers the potential for greater returns on staked tokens.

While Restaking is commonly observed on Ethereum, related protocols have also emerged on networks like Cosmos and Solana. These Restaking protocols aim to expand and enhance the influence of the Cosmos ecosystem's Layer1 and Solana. Furthermore, even gaming blockchain Ronin has announced the launch of the $RON restaking feature.

Apart from these, one aspect that is often overlooked is the burgeoning BTC Restaking ecosystem. As one of the most significant assets in the crypto world, the income generation of BTC assets typically occurs through lending. However, Restaking—utilizing staked BTC assets to secure other networks—offers an alternative avenue for BTC to generate income.

Presently, two protocols within the BTC ecosystem are engaging in such activities: @bounce_bit and @babylon_chain. Let's briefly discuss these two BTC Staking chains.

The core of both these chains is Staking:

- BounceBit's Staking is entrusted to CeFi custody institutions, and bounceBTC is minted on the BounceBit chain. Users can then delegate bounceBTC to Staking operational nodes, which provide users with stBTC—the liquidity version of bounceBTC staked. Users can also potentially earn additional returns through stBTC in on-chain DeFi. This means that bounceBTC users can benefit from three types of income: 1. CeFi income; 2. Staking income; 3. DeFi income.

- Babylon's Staking is self-custodial, and custody contracts are expressed through UTXO transactions. Babylon is building three secure sharing protocols: Bitcoin Staking Protocol, Bitcoin Timestamp Protocol, and Bitcoin Data Availability Protocol. Let's briefly discuss the "Bitcoin Timestamp Protocol": The Bitcoin Timestamp Protocol is used to synchronize PoS chains with the BTC chain to prevent situations where users withdraw their stakes on the BTC chain but are still shown as unstaked on the PoS chain, allowing them to continue voting and participating in governance.

Currently, their funding situations are as follows:

- BounceBit completed a $6 million seed round of financing earlier, led by Blockchain Capital and Breyer Capital.
- Babylon completed an $18 million Series A financing round in December last year, led by Polychain Capital and Hack VC, with additional investments from Binance Labs.

Essentially, both BounceBit and Babylon aim to offer higher income possibilities to BTC holders on the basis of BTC's value storage. Babylon has constructed a BTC Restaking infrastructure, employing a self-custodial approach. In contrast, BounceBit adopts a form where BTC is custodied by CeFi institutions for Restaking considerations. Moreover, BounceBit has already planned out post-Restaking routes, including LRT and DeFi adoption, allowing users to directly use these products to enhance BTC yields upon its mainnet launch.

For users, BounceBit's product line is easier to understand. Currently, BounceBit has initiated deposit activities—users can earn points through deposits to receive future airdrops. While Babylon does not currently have related deposit activities, it has already started testnet activities, allowing users to complete tasks to receive the second Babylon Beacon Badge NFT.

Yamini003

It's necessary to understand such an ecosystem.

Jafar224

I don't really know how to interpret this ecosystem.

Jatin255

If everything can be represented by NFTs, does that mean they become less valuable over time?