The current market capitalization of Bitcoin is $1.33 trillion. But unfortunately, the world's first cryptocurrency serves as passive storage with very limited functionality.
The Bitcoin blockchain does not see events happening outside. So in order to have utility outside the network, BTC essentially has to be deposited with a third party.
What does a standard BTC bridge process look like?
- The user sends a certain amount of BTC to a kind of digital vault (custodial) that allows the creation of wrapped tokens on another blockchain.
- After confirming the deposit made, the corresponding amount of wBTC is sent to their user on the destination network. These coins can now be used on the Ethereum network like any other ERC-20 token.
If the user wants to exchange his wBTC back to BTC, the process will happen in reverse order: the wBTC will be burned and the corresponding amount of BTC will be returned to the user.
There is one BUT in this process - the user is forced to hand over his BTCs to a third party for "storage". This is the reason why most of the bitcoins are idle.
What solution does the project offer?
Babylon's innovation provides bitcoin holders with a new way to earn additional PoS chain revenue in a secure and decentralized manner.
The project is a BTC staking protocol. Thanks to it, users will be able to decentralize their assets in the Bitcoin network, and use them in blockchains based on the Proo-of-Stake (POS) consensus mechanism, receiving income for it.
Bitcoin holders can securely lock their BTC in a decentralized manner and choose which PoS blockchain to stack and profit from. The protocol is modular and can protect the BTC liquidity of any PoS chain. It also provides scalable restacking for bitcoin holders. In two funding rounds, the project raised 26 million $ from tier 1 funds - Polychain Capital, Polygon Ventures, OKX Ventures.
Also recently, the Binance Labs fund announced on their Twitter account to invest in this project!
In our telegram channel, you can find a guide to installing a node in the test network of the Babylon project!
