Babylon Pioneers Bitcoin Staking Mainnet Unlocking New Utility

Junior Content Creator

Harvey Hunter

Junior Content Creator

Harvey Hunter

About Author

Harvey Hunter is a Junior Content Creator at Cryptonews.com. With a background in Computer Science, IT, and Mathematics, he seamlessly transitioned from tech geek to crypto journalist.

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Last updated:

August 22, 2024 03:11 EDT

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Protocol suite Babylon launched the first phase of its self-custodial Bitcoin staking Mainnet on August 22, introducing a new utility for Bitcoin.

In an X post, Babylon announced the new protocol, which enables holders to stake their Bitcoin via smart contracts.

The platform has already amassed over 12,720 stakers and 20,610 staking delegations, according to Babylon’s website.

This development expands Bitcoin’s use cases beyond its traditional roles as a store of value or means of payment, allowing it to participate in securing proof of stake (PoS) networks and earn rewards.

Earn Passive Rewards Bitcoin: How Babylon’s Staking Works

Staking allows Bitcoin holders to lock their BTC using the Babylon protocol’s trustless and self-custodial staking script for a predetermined time.

The process is trustless and self-custodial, meaning it doesn’t rely on any intermediaries, and the BTC holders maintain control over their Bitcoin while it is locked.

Proof of Stake (PoS) is a consensus mechanism used in blockchain networks to validate transactions and secure the network.

In PoS, validators are chosen to create new blocks and confirm transactions based on the number of coins they hold and are willing to “stake” as collateral. This voting power allows them to influence the consensus process of the PoS system.

BTC holders can earn rewards from the PoS protocol in return for providing voting power.

Finality providers perform the voting. A BTC staker can create a finality provider by itself and self-delegate or delegate its voting power to a third-party finality provider.

BTC stakers can either set up their finality provider, thereby directly utilizing their voting power, or delegate their voting power to an established third-party finality provider.

The latter allows stakers to rely on more experienced or specialized entities to handle the complexities of the PoS system while still earning rewards.

Staking Security: How Are Bad Actors Kept at Bay?

The Babylon protocol incorporates a “slashing” mechanism to prevent malicious activities and attacks.

If a finality provider attempts to compromise the PoS system by acting dishonestly or disrupting the network, the BTC delegated to them for voting power can be partially or entirely forfeited.

This slashing mechanism serves as a deterrent against malicious behavior from both BTC stakers and finality providers. The potential loss of staked Bitcoin provides a strong incentive to act honestly and maintain the integrity of the PoS system.

The introduction of Bitcoin staking adds to Bitcoin’s evolving use cases and could drive further innovation and trustless applications for Bitcoin.

Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.