Bitcoin (BTC) stands as the most secure and decentralized digital asset in the world, with a market value exceeding $1.2 trillion. Babylon is revolutionizing blockchain security by enabling BTC staking to share this unparalleled security across proof-of-stake (PoS) chains—unlocking new utility for idle Bitcoin while empowering emerging networks with robust economic safety.
With the rapid growth of Ethereum restaking through platforms like EigenLayer, which has attracted over $13 billion in total value locked (TVL), the concept of shared security has proven viable. But if Ethereum can power decentralized security, why not use an even more secure and valuable asset—Bitcoin?
Babylon answers this question by bridging Bitcoin’s unmatched security model with PoS ecosystems, creating a security aggregation layer that allows other blockchains to inherit Bitcoin’s trust without altering its core protocol.
👉 Discover how next-gen staking is transforming Bitcoin's role in DeFi
The Team Behind Babylon
Babylon is backed by top-tier investors with $18 million in funding and guided by leading cryptographers and researchers. Notable advisors include Sreeram Kannan and Zaki Manian, while David Tse—Stanford professor and head of the Tse Engineering Lab—brings deep expertise in consensus protocols. His lab notably published research in 2021 highlighting vulnerabilities in Ethereum’s proof-of-stake design, underscoring the team’s technical rigor.
This foundation positions Babylon at the forefront of cryptographic innovation, combining academic depth with real-world scalability.
How Babylon Works: Bridging Bitcoin and PoS Chains
Babylon functions as a security middleware between Bitcoin and any PoS blockchain, enabling BTC holders to stake their coins without relinquishing custody. Unlike traditional wrapped or bridged assets, BTC remains on the Bitcoin blockchain, secured by its native consensus.
Here’s how it works:
- Time-Locked Self-Custody Vaults: Users lock BTC on Bitcoin via a time-locked script. Only the original private key can unlock and reclaim funds—ensuring full user control.
- Security Delegation: Babylon uses cryptographic protocols to verify that staked BTC supports external chains. These chains gain access to Bitcoin’s security through timestamped checkpoints stored directly on the Bitcoin network.
- Cross-Chain Communication via IBC: Babylon leverages the Inter-Blockchain Communication (IBC) protocol to aggregate critical transaction data (e.g., validator sets, double-signing events) from IBC-compatible chains and anchor them onto Bitcoin.
- Slashing Mechanism Using EOTS: To enforce honest behavior, Babylon employs Extractable One-Time Signatures (EOTS), made possible by Bitcoin’s Schnorr signature upgrade. If a validator attempts to sign conflicting blocks (a double-sign), their private key reveals itself—and their staked BTC is automatically burned.
This elegant design ensures that misbehavior is both detectable and punishable, all while keeping BTC safely on its home chain.
Why PoW Security Enhances PoS Networks
Proof-of-Stake systems rely on subjective finality—meaning recovery from attacks depends on social coordination among validators. In contrast, Proof-of-Work (PoW) offers objective security that grows stronger over time as more hash power secures each block.
By integrating Bitcoin’s PoW security into PoS chains, Babylon provides:
- Higher attack costs: Attackers must now overcome not just a chain’s native stake, but also the immense cost of attacking Bitcoin timestamps.
- Long-term immutability: Historical transactions gain additional protection via Bitcoin’s timestamping layer.
- Reduced reliance on trust assumptions: No need for third-party oracles or federated signers.
This hybrid approach combines the best of both worlds: the flexibility of PoS with the battle-tested resilience of Bitcoin.
Market Traction and Ecosystem Growth
Babylon has already gained significant momentum:
- Over 100,000 BTC staked on testnet
- More than 45 strategic partnerships, including Cosmos-based chains, decentralized AI projects, and Bitcoin L2 rollups
- Growing integration within the IBC ecosystem, second only to EigenLayer in terms of active AVS (Actively Validated Services) adoption
These numbers reflect strong developer interest and validate Babylon’s vision of making Bitcoin a foundational layer for cross-chain security.
👉 See how decentralized networks are leveraging Bitcoin’s security
The Potential Impact of Babylon
1. Unlocking Passive Income for Idle BTC
Over 67% of Bitcoin supply has remained untouched for more than a year—and 25% for over five years. Currently, options for earning yield on BTC are limited:
- Wrapped BTC (e.g., WBTC): Trust-based custodial models
- Single-sided DeFi pools: Low yields (0.01%–1.25%)
Babylon changes this by offering non-custodial BTC staking, where users earn yields from consumer chains—ranging from 2.36% to 17% APY, up to 50x higher than traditional BTC yield products.
2. Lower Cost of Security for Consumer Chains
BTC carries a lower interest rate premium compared to ETH and most altcoins. Chains using BTC for security can achieve the same level of economic protection at a lower issuance cost—freeing capital for ecosystem development instead of validator subsidies.
Some networks currently spend over $40 million annually on security budgets. Babylon could drastically reduce these costs.
3. Competitive Positioning Against Ethereum Restaking
Ethereum supports over $104 billion in staked ETH (~30% of supply), fueling a vibrant LST economy. EigenLayer adds another $14 billion in restaked value.
In comparison, Bitcoin’s market cap exceeds $1.2 trillion. Even if only 10% of BTC supply participates in staking via Babylon, it would surpass Ethereum’s entire staking ecosystem in secured value.
4. A True Scalability Solution for Bitcoin
As demand for Bitcoin usage grows—driven by ordinals, BRC-20s, and L2s—scaling solutions face limitations due to decentralization trade-offs or dependency on centralized bridges.
Babylon enables trust-minimized scaling by allowing sidechains and rollups to inherit Bitcoin’s security natively—without hard forks or trusted intermediaries.
5. Bridging Cosmos and Ethereum’s Visions
- Ethereum: Strong security center, but fragmented interoperability between rollups.
- Cosmos: Built-in interoperability (IBC), but lacks a high-value shared security source.
Babylon fills this gap by making Bitcoin the security backbone of Cosmos, potentially enabling Cosmos chains to compete directly with Ethereum in terms of both scalability and security.
Challenges Ahead
Despite its promise, Babylon faces hurdles:
- Adoption by BTC Holders: While many hold BTC long-term, transitioning them into active stakers requires education and incentives.
- IBC Dependency: Currently, only IBC-connected chains (around 91 zones) can integrate directly. However, projects like Picasso and Landslide Network are extending IBC to non-Cosmos chains, expanding Babylon’s total addressable market.
Frequently Asked Questions (FAQ)
Q: Can I lose my BTC when staking with Babylon?
A: Yes—but only if you engage in malicious behavior like double-signing. Under normal conditions, your BTC remains safely locked on Bitcoin and is fully recoverable after the lock-up period.
Q: Does Babylon require wrapping or bridging BTC?
A: No. Your BTC stays on the Bitcoin blockchain. Babylon uses cryptographic proofs to verify staking commitments without moving or wrapping your coins.
Q: What yield can I expect from BTC staking?
A: Yields depend on the consumer chain using Babylon’s security. Rates typically range from 2.36% to 17%, significantly higher than traditional BTC yield options.
Q: Is Babylon compatible with non-IBC blockchains?
A: Currently focused on IBC chains, but future expansions may include compatibility via IBC relays or bridges being developed by third-party projects.
Q: How does Babylon compare to EigenLayer?
A: Both enable restaking, but Babylon uses Bitcoin—the most secure and valuable asset—instead of ETH. This gives it a stronger foundation for economic security at scale.
Q: Is my private key ever shared with Babylon?
A: No. You retain full control of your keys. Babylon uses zero-knowledge proofs and EOTS to verify honesty without accessing your wallet.
Final Thoughts
Babylon is pioneering a new paradigm: turning Bitcoin into an active participant in multi-chain security. By enabling non-custodial BTC staking, it unlocks trillions in dormant value while offering PoS networks a cheaper, more secure alternative to native validation.
With EigenLayer valued potentially between $3–15 billion after securing $427 billion in ETH value, the implications for Babylon—leveraging over $1.4 trillion in Bitcoin security—are profound.
As the lines between Layer 1s blur and shared security becomes standard, Babylon may well become the cornerstone of a truly interconnected, Bitcoin-secured web3 future.