DeFi on Bitcoin- Babylon Innovates Bitcoin Staking, Attracts Billions in BTC
DeFi on Bitcoin– Babylon, a leading company in the decentralized finance (DeFi) space, has made headlines with its groundbreaking approach to Bitcoin (BTC) staking. Co-founder and CTO Fisher Yu, speaking at the Bitcoin MENA event in Abu Dhabi, explained how Babylon’s staking protocol has attracted billions of dollars in BTC, enabling decentralized finance to thrive on Bitcoin’s network.
The Evolution of Bitcoin DeFi: A Trustless Revolution
Before Babylon’s innovation, “true Bitcoin DeFi” did not exist, according to Fisher Yu. While Bitcoin could be staked or wrapped to use in decentralized applications (DApps), there was still a trust requirement that mirrored traditional finance (CeFi). If you do lending, you have to give your Bitcoin to someone else and then keep your fingers crossed that the borrower can return your Bitcoin, Yu explained.
This creates counterparty risk, similar to centralized finance systems, where users lose control of their assets. Yu emphasized that in traditional DeFi systems, Bitcoin holders often have to trust third parties, which undermines the decentralization that DeFi promises.
Babylon’s Solution: Trustless Bitcoin Staking
Babylon’s team claims to have created the first native Bitcoin staking protocol, offering a true DeFi experience. According to Yu, We invented Bitcoin staking so that it is a native use case for Bitcoin, which does not require the Bitcoin holder to trust any third party. Unlike traditional Bitcoin lending or bridging to other blockchains, Babylon’s system allows users to stake their BTC without relying on any intermediary, ensuring they retain full control over their funds.
Yu added, Similar to holding Bitcoin or using it for simple payment, you only trust Bitcoin and yourself. You do not have to trust anyone else. The Bitcoin staked in Babylon will be used to secure a proof-of-stake (PoS) blockchain, which Babylon plans to launch soon.
Bitcoin Staking and the Launch of Babylon’s PoS Blockchain
One key feature that sets Babylon’s Bitcoin staking apart from other blockchain networks is its unique reward system. Unlike Ethereum or Solana, which reward stakers with the native token of the blockchain, Babylon rewards stakers with the native token of the PoS blockchain secured by the Bitcoin capital staked.
This innovative mechanism allows Bitcoin to play a central role in DeFi without compromising the integrity of the Bitcoin network. As Babylon’s platform continues to evolve, it promises to reshape how Bitcoin is integrated into decentralized finance, offering both security and scalability.
A Rapid Rise: Babylon Attracts $3.5 Billion in Staked Bitcoin
Babylon’s Bitcoin staking protocol has gained massive attention, quickly attracting substantial amounts of BTC from investors. During Babylon’s initial staking cap, the protocol accepted 1,000 BTC (around $100 million) within just one hour. The second cap drew in an astounding 24,000 BTC, worth $2.3 billion at the time, in just 90 minutes.
In some cases, there are people who staked 500 Bitcoin in one transaction because that was the maximum limit, Yu said. As of December 10, Babylon opened its third cap for staking Bitcoin. The protocol has now attracted $3.5 billion in staked BTC, further solidifying Babylon’s role as a key player in the Bitcoin DeFi space.
Security Challenges in Bitcoin DeFi: Risks and Vulnerabilities
While Babylon’s Bitcoin staking protocol has garnered significant interest, Yu acknowledged that DeFi on Bitcoin will face similar vulnerabilities to those seen in broader DeFi ecosystems. Like all trustless systems, Babylon’s platform assumes that the code and infrastructure run correctly, but there is always the potential for exploits and hacks.
DeFi is trustless, which assumes the code and the system run correctly. But if there is fraud in a code or a bridge system, people can lose money, Yu warned. “So, in theory, they are safe, but in practice, there are many attack vectors that can happen.”
Despite these risks, Yu remains optimistic about the future of Bitcoin DeFi. We have learned so many lessons from the past incidents across the DeFi space. So we can go through this train and evolve the systems at a much faster pace compared to other ecosystems, he added.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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