The narrative of BTC asset launch has come to an end, and Memecoin can always be played, but it is not the ultimate form of the BTC ecosystem. The narrative of BTC asset staking is about to become mainstream.
Author: blockpunk
I. The narrative of BTC asset launch has come to an end
The narrative of BTC asset launch has come to an end. Memecoin can always be played, but it is not the ultimate form of the BTC ecosystem. The narrative of BTC asset staking is about to become mainstream.
Represented by Babylon, providing economic security for other PoS chains by pledging BTC, and earning rewards through staking, this opens up the track of BTC staking and will completely change the way the BTC ecosystem is played, from playing with BTC principal to playing with BTC interest.
BTC staking is driven by two important narratives. First, similar to ETH's DeFi, it first increases the overall asset yield.
According to DefiLlama's data, the current market size of BTC staking exceeds $10 billion, with yields ranging from 0.01% to 1.25%, usually needing to be entrusted to third-party CeFi institutions. The staking rewards of PoS blockchains often range from 5% to 20%, and staking BTC for other PoS chains will also yield considerable returns. BTCStaking can achieve 50 times the traditional BTC staking returns, which will be a huge growth point.
The second point is in the context of the hot BTC L2, filling the narrative gap between L2 and BTC. There are already nearly 80 BTC L2s in the market, and if the BTC mainnet blocks are completely filled with DA, it can only support up to twenty L2s. Many L2s have resorted to reducing the frequency of BTC data uploads to once every few months. How can these L2s using centralized custody bridges, security not guaranteed by BTC, and built with EVM convince the community and be related to the BTC ecosystem? There is a huge narrative gap here.
Obviously, being a validator network for Babylon or BounceBit brings great legitimacy to BTCL2s, and being able to benefit from Staking BTC overflow through PoS staking will directly benefit tokens and the ecosystem.
Of course, unlike the market situation faced by the restaking project Eigenlayer for ETH, most BTC holders are passive holders, with 67% of BTC holders not having moved their BTC for over a year, so it is somewhat difficult to convince BTC holders to participate in staking.
At the same time, BTC staking does not have native coin-based interest like ETH staking, and the interest is often in the form of the L2's own tokens, which carries certain risks. Of course, some L2s that use BTC as gas fees also try to distribute the fees received in BTC to staking users, but this is clearly sufficient support.
To put it bluntly, the significance of BTCL2 is to attract BTC deposits, and BTC Staking is a more efficient way.
In addition to Staking, it is also important to consider the performance of BTC. Building L3 based on existing mature L2 staking, such as projects like Nubit that can make L2 DA nesting, or projects like CBK's UTXo Stack framework, can gain greater advantages in technical selection.
II. @babylon_chain
Babylon uses cryptography to provide POS security for other blockchains through native BTC staking.
Babylon's staking is cross-chain staking, with the pledged bitcoins kept in scripts on the Bitcoin network. Pledgers can specify the selected validators to earn validator rewards on the corresponding POS chain.
Technically, Babylon's staking process operates entirely on the cryptographic method of "extractable one-time signature EOTS," without relying on any third-party bridges or custodians. Babylon also includes complete BTC Staking with penalties. If the pledger (also a validator of this POS chain) remains honest and only signs one valid block each time, they will receive the validator rewards of the POS chain. If they attempt to act maliciously and sign two blocks at the same block height, their EOTS private key will be reverse-engineered, and anyone can use this private key to transfer the pledged BTC on the BTC network, achieving forfeiture.
Currently, Babylon is conducting testnet staking, will launch the next SBTC test in May, and will start pre-deposits in the second half of the year, with tokens possibly being issued at the end of the year. Babylon has also revealed in space that it will issue liquid assets for staking BTC (similar to stETH), and there are already restaking and lrt, lst projects by @Chakrachain@LorenzoProtocol @yalaorg @SataBTC.
III. @ChakraChain
Chakra is a staking & restaking protocol for BTC, where users' deposited BTC will be put into BTC Staking protocols such as Babylon to earn multiple rewards. At the same time, Chakra provides validation services maintained by Stakers to ensure security for BTC L2.
Chakra aggregates a series of user signatures through the MuSig2 protocol to generate a UTXO with a time lock, which can "stake" bitcoins for a certain period, completing the staking action. Bitcoin holders do not need to transfer BTC to any third-party custodial address, but achieve "1-layer" self-custody through a derived address.
The unlocking conditions for the staked BTC UTXO are only two: one is to be jointly signed by the Chakra network and the user to retrieve it, providing flexibility; the second is to automatically gain control of these BTC at the end of the set lock-in period, even if the Chakra network stops running, users can still withdraw BTC on time.
Unlike Babylon, which also uses self-custody BTC staking, the Chakra network does not have the ability to forfeit users' staked BTC, but ensures consensus by reducing consensus rewards, further avoiding potential errors that threaten users' BTC assets.
Chakra has also introduced ZK capabilities into the BTC staking ecosystem and has received investments from Starkware, ABCDE, Bixin, and Coin Summer. It is currently in the testnet phase, and early participants can go to chakrachain.io/devnet to connect their wallets to receive proof of participation.
IV. @build_on_bob
BOB is a BTC EVM sidechain architecture implemented using the OP Superchain SDK, using wBTC, tBTC, and other wrapped BTC on ETH as gas fees, and will introduce BTC security through a new POW merged mining protocol in the future.
The BOB testnet has been running for several months and has already established a certain ecosystem. The mainnet will go live on May 1st, and the first phase of deposit activities is currently underway. Accumulated Spice points from deposits correspond to future $BOB tokens, which will be directly TGE after the mainnet launch.
Participating in the pre-staking of BOB requires operations on the ETH mainnet. If using BTC, it needs to be cross-chained to $tBTC, $wBTC, with a yield multiplier of 1.5x. It also accepts DAI, eDLLR, rETH, USDC, USDT, wstETH, STONE, with a staking reward multiplier of 1.3x, and accepts ALEX, ETH, eSOV for staking with a reward multiplier of 1x.
BOB has strong resources and has collaborated with the largest listed mining company on the US stock market, $MARA, to launch BTCL2. It has also recently announced a $10 million investment from Coinbase, positioning itself as a project comparable to Binance and bouncebit. The first phase of deposits for BOB currently stands at around $250 million, showing great potential.
Deposit link: fusion.gobob.xyz/?refCode=cdmzz5
V. @BotanixLabs
BotanixLabs has built an EVM-equivalent L2 on Bitcoin, which operates on POS. Users can stake BTC in a multi-signature address to participate in L2 staking or bridge BTC to participate in the ecosystem. The BTC assets on Mezo are protected by a decentralized multi-signature network called Spiderchain.
Users can become validator nodes in PoS and the multi-signature network Spiderchain by staking BTC. Botanix uses the hash value of Bitcoin blocks as the source and randomly selects nodes to participate in PoS block production. The finalized block header is then engraved into the BTC block for final confirmation.
The settlement layer of BotanixL2 is BTC, with gas also coming from cross-chain BTC, and its consensus also utilizes the security of BTC as a safeguard.
All assets on L2 on BTC are protected by the multi-signature network Spiderchain, and nodes randomly form multi-signature groups to control the BTC in the multi-signature address. The cost of malicious behavior by nodes is high, as their staked BTC can be forfeited.
Botanix's testnet has been running for half a year, and users can participate in testing and receive a series of NFT credentials at botanixlabs.xyz/en/testnet. BotanixLabs has been building L2 on BTC since 2022 and has a certain technical strength, making its testnet a good opportunity for participation.
VI. @bounce_bit
BounceBit is an interest-bearing and restaking infrastructure based on BTC. BounceBit attempts to integrate CeFi and DeFi businesses in BTC interest and uses BTC staking to guarantee the security of the blockchain.
BounceBit itself is a BTC EVML2, where in addition to staking its native token BB, L2's PoS staking also allows staking of BTC assets.
At the same time, the BTC assets absorbed by BounceBit (including mainnet BTC and BTCB, WBTC on BNBChain) are all custodied in centralized custody services supported by Mainnet Digital and Ceffu, which is the only institutional custody service used by Binance. BounceBit attempts to eliminate BTC users' concerns about security through this endorsement.
The deposited BTC assets on BounceBit become bounceBTC, and users can choose to stake these BTC to other validator networks, such as EVM chains, decentralized bridges, and oracles, to earn validator rewards from these networks.
BounceBit brings triple rewards to users through a series of businesses. Mainnet BTC assets are custodied into stable returns by institutions such as Binance, and users can also stake on the bouncebit native chain to earn BB tokens, or restake to other validator networks for rewards, or use them for DeFi businesses such as AMM, lending, etc. BounceBit is supported by Binance and will provide 8% of the tokens to Binance Megadrop BNB stakers.
VII. @MezoNetwork
Mezo is a BTCL2 built on tBTC using the CosmosEVM architecture, achieving asset transfer from BTC to Mzeo L2 through tBTC's multi-signature cross-chain bridge.
Mezo's feature is the introduction of what is called HODLProof, similar to ve33 in BTCstaking, which is a form of Bayesian economics. Users can lock BTC for consensus on Mezo, and the longer the lock-in period, the higher the staking validation weight and rewards.
Mezo's PoS is divided into two parts, the BTC part and the native token MEZO part, both of which can earn veMEZO as a reward, incentivizing different reward pools, with 1/3 of the total rewards going to BTC stakers and 2/3 going to MEZO stakers.
On April 9th, the Bitcoin second-layer network Mezo completed a $21 million Series A financing, led by Pantera Capital, with participation from Multicoin, HackVC, DraperAssociates, and others.
Mezo has already started early deposit activities, and users can now deposit and withdraw native BTC, wBTC, and tBTC, with the mainnet expected to launch in the second half of 2024.
VIII. @LorenzoProtocol
LorenzoProtocol is a liquidity staking protocol built on Babylon, providing a fast deployment service for L2-as-a-service. Lorenzo aims to lower the participation threshold for BTC staking projects like Babylon, reduce the risk of stakers' forfeitures, and release the liquidity of staked BTC assets.
Babylon is a relatively low-level BTC staking protocol, similar to native staking in ETH, and may have certain requirements for the minimum staked BTC amount.
For individual users, staking rewards are not stable and there is a risk of forfeiture. Therefore, it is necessary to participate in a liquidity staking protocol for BTC staking as a whole unit of risk and return, which is what the Lorenzo protocol aims to do, similar to Lido.
Stakers can choose to participate in staking for PoS chains and deposit their BTC into the corresponding Lorenzo custodial treasury, which is a multi-signature address for Bitcoin.
Stakers can receive an equivalent amount of stBTC on the Lorenzo chain as proof of liquidity for staking BTC on Babylon and receive staking rewards.
The Lorenzo chain itself is protected by Babylon's shared security for Bitcoin, an EVM-compatible Bitcoin L2, and will also help deploy more BTCL2 chains in a modular manner. The Lorenzo chain serves as an interoperable chain for these L2 chains.
【Disclaimer】The market is risky, and investment should be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views, or conclusions in this article are suitable for their specific situation. Investment based on this article is at your own risk.
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