Analysis of BTC Liquid Staking Track: New Opportunities for Trillions of Dollars in Funding

Babylon, as a trustless Bitcoin staking solution, implements native asset staking of BTC on layer one through cryptographic technology. It not only allows Bitcoin holders to earn staking rewards but also provides POS security assurance for other blockchains.

The staking process of Babylon operates entirely based on cryptographic principles, with Bitcoin not leaving the mainnet, and its security guaranteed by the PoW mechanism. This design has been widely recognized in the BTC community.

The emergence of Babylon has pioneered the BTC staking track, with the potential to completely change the gameplay of the BTC ecosystem. At the same time, it can also solve problems such as inflation and startup difficulties for small and medium-sized POS chains.

BTC Liquid Staking Plan

The BTC liquid staking program is similar to a demand deposit, allowing users to deposit and withdraw at any time while earning interest. The liquid staking tokens can also generate returns in other DeFi projects. In contrast, Babylon staking is more like a fixed deposit, offering higher returns but cannot be withdrawn immediately.

Liquid staking essentially allows project parties to borrow users' BTC to stake in Babylon, using the staking rewards to pay users interest, while the issued bond ( liquid staking token ) can be traded.

Currently, most Babylon liquid staking tokens are built on Ethereum, with plans to support multi-chain in the future. Except for Lombard, other projects use a custody model, where the project party stakes on behalf of users to Babylon.

pSTAKE

pSTAKE adopts an institutional custodial liquidity model. User funds are staked to the Pstake absorption address, with liquidity support provided by institutions like Cobo, and the project team then stakes BTC to Babylon.

yBTC is the official liquid staking token of pSTAKE and has not been issued yet. In the future, users will be able to use yBTC to participate in other DeFi projects. yBTC will initially be issued on Ethereum and later expand to other L2.

pSTAKE is currently in the v1 testnet phase, v2 will launch the Babylon staking feature on the mainnet, v3 will issue yBTC tokens, and v4 will achieve diversified returns.

The testnet has already seen over 40,000 users participating, staking more than 40 sBTC. It is expected that a rewards program will be launched when the mainnet goes live, and participants in the testnet staking will receive additional points as rewards.

Lorenzo

Lorenzo has implemented a principal and interest separation business similar to Pendle. Users send BTC to Lorenzo's multi-signature wallet, which is hosted by a staking agent, and receive stBTC as a staking certificate. Lorenzo then stakes the BTC to Babylon.

Lorenzo issued three tokens:

1. Liquidity principal token ( LPT ): represents redeemable BTC principal, stBTC is Lorenzo's official LPT.

2. Yield Accumulation Token ( YAT ): Represents the right to claim earnings at the end of the re-staking period and can be traded or transferred.

3. Staking Proof Token ( SPT ): Users automatically convert rewards received in YAT to SPT, which are then destroyed in order to extract BTC.

LPT and YAT are both tradable, and holders can withdraw BTC principal and earnings respectively. stBTC is expected to replace wBTC, and the value of YAT comes from yield and speculation.

Lorenzo's mainnet will launch in two phases. Phase One tests the minting and exchange of stBTC, while Phase Two introduces staking agents to issue YAT on behalf of users' staking rewards.

Currently, Lorenzo is conducting a pre-launch staking activity, where participants can earn rewards and points.

Lombard

Lombard adopts a more decentralized approach, where user funds are directly staked to Babylon without the need for third-party liquidity provision. The overall architecture includes users, Bitcoin nodes, back-end, and a decentralized state machine managed by Consortium ( for the staking process ).

LBTC is Lombard's liquid staking token, redeemable 1:1 for BTC, cross-chain, and usable as collateral in DeFi. LBTC was first issued on Ethereum and will expand to multi-chain in the future.

Lombard is currently in the first phase, running in Private Beta mode on the Ethereum mainnet. The second phase will open LBTC to the public while maintaining a deposit cap. The LBTC waitlist is used to manage demand and reward early participants.

Solv

Solv integrates Staking and Restaking yields from BTC Layer2, including Babylon( and DeFi yields from ETH Layer2, tokenizing them into SolvBTC. SolvBTC can be seamlessly integrated with other protocols and currently supports Ethereum, BNB, ARB, and Merlin.

Solv adopts a decentralized asset management architecture, including modules such as security guardians and price oracles, to establish a trustless process through smart contracts. Off-chain funds are held by reputable custodians.

solvBTC.BBN is Solv's official liquid staking token, which will be integrated with various DeFi protocols and can be used for DEX, lending, and yield trading, among others.

Since its launch in April, SolVBTC has attracted over 12,000 BTC staked and 20,000 users participating. Solv has three types of point mechanisms: basic points, accelerated points, and referral points.

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) Bedrock

Bedrock was initially developed for the Eigenlayer ecosystem and later became the largest staking entry on IOTX, achieving nearly $200 million TVL in the ETH and IOTX ecosystems.

Recently, Bedrock was commissioned by Babylon to develop the BTC liquid staking protocol UniBTC, allowing Ethereum users to stake wBTC to Babylon. Holding uniBTC can earn Bedrock rewards and Babylon points.

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) Master Protocol

Master Protocol is a yield aggregation platform that integrates BTC ecosystem projects such as Bouncebit, Babylon, and BitLayer. Its two main products are Master Yield Market and LST Protocol on Botanix Spiderchain.

Master Yield Market will package the aggregated Bitcoin ecological assets as MSY, and then split it into MPT### principal ( and MYT) interest ( for users to trade.

Master Protocol has launched the Master Yield Pass NFT incentive program, allowing holders to earn points, platform fee dividends, and other benefits.

) Chakra

Chakra is a ZK-driven shared modular Bitcoin settlement layer that provides unified settlement services for layer two networks. The funds in the Bitcoin network for Chakra are hosted by Cobo's MPC solution and staked to Babylon to earn returns.

tlBTC is the staking certificate of Chakra, corresponding to the staked BTC at a 1:1 ratio. tlBTC can be used as a staking certificate, liquidity asset, and native asset for cross-chain settlement.

Chakra has performed excellently in multiple testnets of Babylon, ranking as the number one Finality Provider, accounting for 36% of Babylon's total TVL. Chakra has also launched a points system on the testnet, supporting both self-custody and MPC staking methods.

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Summary

Babylon's BTC staking is about to launch, which is expected to significantly change the BTC ecosystem. It will greatly increase the yield of BTC assets, thereby activating the positive cycle of the BTC ecosystem.

Unlike ETH staking, BTC staking is more similar to the restaking business of eigenlayer. Therefore, it is unlikely that there will be a monopoly by giants in the BTC staking field, and early projects have a better chance of rapid growth. For investors, this field also contains potential high return opportunities.