Babylon wants to develop the staking from Bitcoin to reduceinflation on PoS channels. The project interests Polychain Capital and Hack VCwho are leading a tour de table from 18 million dollars.
Enter the staking of bitcoins while the crypto asset is based on the Proof of Work (PoW) and not the Proof of Stake (PoS), this is the ambition of Babylon. The actor specializing in Bitcoin unveiled its project in July in a litepaper.
The company wants to offer BTC holders the opportunity to secure PoS networks via their tokens. In return, they would receive PoS returns. It’s the principle of staking, but through PoW tokens.
Staking in the spirit of Bitcoin and Nakamoto
This innovation follows the spirit of Nakamoto and does not require any fork, hard or soft, of the Bitcoin chain, nor any gateway, wrapping or custody of bitcoins by a third party,” defends Babylon.
And investors are interested in this project. The crypto firm has just closed an $18 million funding round led by Polychain Capital and Hack VC.
Other major investors in the crypto ecosystem include Framework Ventures, Polygon Ventures, Castle Island Ventures, OKX Ventures, Finality Capital, Breyer Capital, Symbolic Capital and IOSG Ventures.
Thanks to this funding, Babylon will continue to develop its Bitcoin staking protocol. This initiative represents a break with the past.
Reducing inflation on PoS chains
Traditionally, securing a PoS network relies on the staking of blockchain-native tokens.
For Babylon, this system has various limitations, including forcing networks to “implement very high inflation to pay for the high rewards” of staking, thus affecting “the utility of the tokens and the economic health of the chain”.
The protocol publisher’s promise, then, is to open PoS networks to “the world’s most important crypto asset”, while enjoying security “far superior to what the native token can achieve on its own”.
Babylon partners with Polygon
Polychain and HackVC are therefore interested in the concept of Bitcoin staking. For Luke Pearson, Polychain’s managing director, the protocol developed by Babylon contributes to increasing the value of the asset, while enabling the emergence of innovative new services.
By creating the first protocol for Bitcoin staking and restaking, Babylon not only unlocks the blockchain’s largest asset, but can also enable the security services supported by Bitcoin (such as the data availability service) for the entire blockchain ecosystem,” emphasizes HackVC’s Alex Pack.
Babylon does not at this stage specify a date for the launch of its Bitcoin protocol. Nor does the company disclose the identity of PoS networks interested in hosting BTC as a staking asset.
Polygon, on the other hand, is showing its interest by participating in the funding round, with co-founder Sandeep Nailwal emphasizing Babylon’s role as a contributor to Polygon CDK and its ecosystem.
Last summer, Stroom, a Bitcoin liquid staking protocol, raised $3.5 million from Greenfield Capital. Its solution enables users to generate income on the Lightning Network without locking up their bitcoins.
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