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'DeFi on Bitcoin' Gets a Boost as BOB L2 Integrates $6B BTC Staking Protocol Babylon
The integration allows BOB, a "hybrid L2," to use Bitcoin as its anchor chain where transactions with assets from other chains can be irreversibly recorded.
Dec 18, 2024, 8:36 p.m.
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What to know:
- Hybrid layer-2 network BOB, which wants to make Bitcoin the center of the DeFi universe, has taken a step toward that goal by integrating with BTC restaking protocol Babylon.
- Integrating with Babylon forms part of this roadmap by giving BOB "Bitcoin finality," the point at which a transaction is permanent and irreversible on the oldest blockchain.
- Babylon is the foremost Bitcoin staking project, with total value locked of around $6 billion.
BOB, the "hybrid layer-2" network seeking to make Bitcoin the center of the decentralized finance (DeFi) universe, has taken a step toward that goal by integrating with BTC restaking protocol Babylon.
An abbreviation of "Build on Bitcoin," BOB's aim is to establish Bitcoin as the foundational network for DeFi by creating bridges between itself and other blockchains, using Bitcoin as the anchor chain to finalize transactions.
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Integrating with Babylon forms part of BOB's roadmap by giving it "Bitcoin finality," the point at which a transaction is permanent and irreversible on the oldest blockchain. Assets deposited from other chains on BOB would be confirmed and verified on Bitcoin via Babylon's protocol.
Babylon, which is billed as a way of using BTC to secure other protocols and decentralized applications, is the foremost Bitcoin staking project in the sector, with total value locked (TVL) of around $6 billion.
Staking refers to offering up crypto tokens to support the running of a blockchain network in return for rewards, similar to accruing interest in a bank account.
Such a process is fundamental to networks like Ethereum and Solana which run on a "proof-of-stake" mechanism, but is absent from Bitcoin, which use "proof of work."
However, given that the total market cap of bitcoin is greater than every other crypto asset combined, projects like Babylon are exploring ways of tapping into BTC's deep reserves to benefit the broader industry.
This week, Babylon completed its third staking round in which it took its total BTC staked to 57,290 ($5.93 billion), placing it in the top 10 protocols by TVL, according to data tracked by DeFiLlama.
BOB's next step is to launch bridges connecting Bitcoin to other networks, using BitVM, a computing paradigm designed to allow Ethereum-style smart contracts on the world's original blockchain. BitVM is set for testnet release in Q1 of 2025.
Read More: WBTC Episode 'Reopened Old Wounds' of Centralized Failures: Bitcoin Builders Association
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