Author: Kevin, Caiya researcher from BlockBooster

Bitcoin has been limited in its potential for income due to its proof of work (PoW) consensus. Unlike proof of stake (PoS), Bitcoin lacks a native staking mechanism. However, with the rise of BTCFi, new ways are gradually emerging to allow Bitcoin to generate income without sacrificing security. The BTCFi ecosystem is roughly divided into two parts: the BTC layer and heavy staking, as well as asset protocols such as ARC20 and BRC20. This article will explore how emerging participants in the BTCFi field are reshaping the landscape of Bitcoin heavy staking and compare their main advantages.

Current Landscape of Bitcoin Heavy Staking

Bitcoin heavy staking is not a new topic in this cycle. There are well-known projects such as BounceBit, Coredao, Stakelayer, as well as Babylon and Symbiotic, which have recently received widespread attention.

First, let's analyze Babylon's solution. Babylon's Bitcoin staking scheme contains multiple innovations aimed at enhancing security and user experience, making it stand out among many protocols:

• Remote Staking: Babylon uses Bitcoin's UTXO model and script system for staking, slashing, and reward distribution. A significant advantage is that users staking Bitcoin do not face slashing penalties, only node operators are affected. This means that users' Bitcoin is not at risk of loss, only the staked funds cannot be unlocked early, resulting in higher security.
• Timestamp Server: Babylon's timestamp server records events from the PoS chain on the Bitcoin mainnet, providing tamper-resistant timestamp records. Although the Bitcoin mainnet ensures that these records cannot be changed once they are on-chain, the accuracy of the timestamps still depends on Babylon's PoS network.
• Three-layer Architecture: Babylon's architecture is divided into three layers—Bitcoin as the base layer, Babylon as the middle layer, and the PoS chain as the top layer. Babylon records the checkpoint of the PoS chain on the Bitcoin blockchain, ensuring the immutability of the data. By using Cosmos as the middle layer, it enhances its scalability and flexibility, attracting node operators and enabling native Bitcoin staking to support Babylon's PoS network.

While Babylon is at the forefront of native Bitcoin staking, it is not the only protocol exploring heavy staking. Let's take a look at the Bitcoin staking schemes of two other star projects:

• Symbiotic: Founded by Lido and Paradigm, Symbiotic is considered a direct competitor to EigenLayer. Symbiotic recently announced support for Bitcoin heavy staking, but currently only accepts WBTC staking. Unlike Babylon's native Bitcoin staking, Symbiotic requires users to transfer Bitcoin to a third-party custody address. So far, Symbiotic has staked 1,630 WBTC and incentivized user participation through reward points.
• CoreDAO: CoreDAO offers two staking methods: one is native staking, allowing Bitcoin holders to delegate Bitcoin to Core validators without transferring funds; the other is custody staking, where users send Bitcoin to a locking address and mint coreBTC on the CORE chain. Currently, CoreDAO only supports custody staking options.

All three aim to bring more use cases to the Bitcoin ecosystem, sparking cross-chain communication or data sharing between Bitcoin and other chains. The staking platforms themselves share the security of the underlying network through modular thinking and empower AVS upwards, providing infrastructure for wide applications, significantly improving the efficiency and performance of the blockchain.

Advantages:

• Babylon and CoreDAO shorten the staking process of the PoS chain through Bitcoin's timestamp mechanism.
• Symbiotic has the support of Lido and Paradigm, giving it an advantage in protocol cooperation and ecosystem promotion.
• Babylon is the first to achieve native staking, achieving trustless Bitcoin staking.

Shortcomings:

• CoreDAO and Symbiotic still rely on third-party custody to address trust assumptions.
• Babylon's PoW+PoS architecture has security logic shortcomings, relying passively on the Bitcoin network to achieve accounting functions and cannot actively utilize the security of the Bitcoin network.

Unlike Ethereum's staking platforms, Bitcoin's staking platforms do not directly transfer the security of the Bitcoin network to their respective PoS networks, which is also a key direction for future development.

Bitcoin Heavy Staking Ecosystem

Several protocols have collaborated with the Bitcoin heavy staking ecosystem, aiming to enhance the liquidity and utility of staked Bitcoin assets:

• Bedrock: As the leading project in the first round of pre-staking for Babylon, holding about 30% of the shares, Bedrock supports staking WBTC to mint uniBTC. After the launch of the Babylon mainnet, users will be able to earn rewards from uniBTC and Babylon staking, and may also receive airdrops through Bedrock's Diamonds program.
• Lombard: Lombard allows users to stake Bitcoin through Babylon, with Lombard managing the heavy staking process. When users stake Bitcoin, Lombard mints an equivalent amount of LBTC on Ethereum. Users can use LBTC to participate in DeFi activities, enjoying the flexibility of cross-chain earnings.
• Lorenzo: Lorenzo provides liquid staking and heavy staking through a principal-revenue separation model, allowing users to stake Bitcoin or BTCB to earn stBTC (liquid principal tokens) and YAT (revenue tokens). This dual-token system allows users to accumulate Lorenzo points while receiving Babylon's native staking rewards.
• Pell Network: Pell is the first secure network built on Bitcoin heavy staking and operates on Babylon's AVS network. Pell's TVL has exceeded $200 million in three weeks, with over 410,000 unique addresses. Pell offers four heavy staking methods, covering native Bitcoin staking to staking LP tokens containing liquid BTC derivatives, and its AVS architecture allows it to capture significant income from middleware, oracles, modular chains, and more.
• PumpBTC: Allows users to stake WBTC or BTCB and receive pumpBTC tokens at a 1:1 ratio. What sets PumpBTC apart is that the heavy staking process is handled by third-party custodians (such as Cobo and Coincover). Users can enjoy earnings without directly interacting with the protocol, simplifying the staking process.
• Solv Protocol: Solv has developed a cross-chain Bitcoin asset liquidity layer, supporting cross-chain bridging of WBTC on Arbitrum, BTCB on the BNB chain, and BTC.b on Avalanche. Users can earn XP points by holding solvBTC, participating in lending protocols, or adding liquidity to pools. Additionally, even though the Babylon mainnet has not yet launched, users can bridge to Babylon through Solv's vault to earn more points.
• Stakestone: Expected to adopt a model similar to ETH-STONE, users stake native Bitcoin to Babylon and mint revenue-based STONEBTC for cross-chain liquidity. Users can earn points from various ecosystems, such as 2x Scroll points.

Conclusion

Transforming Bitcoin into an income-generating asset is of great significance. Bitcoin heavy staking is an effective complement to the definition of Bitcoin as "digital gold," greatly enhancing its liquidity. Unlike the Ethereum ecosystem, BTCFi protocols such as Babylon, Symbiotic, and Coredao do not rely on pre-existing infrastructure, which brings both challenges and opportunities. Platforms like Solv, Lombard, and Lorenzo are gradually developing, focusing on multiple rewards, security flexibility, and dual incentive systems. BTCFi is still in its early stages, with rapid technological and ecosystem development, and we will continue to monitor the dynamics in this area.

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