Babylon, a crypto startup, claims it has created a means to stake Bitcoin on any proof-of-stake blockchain.
Some crucial truths control accepted thinking regarding blockchain. An example of these truths is that in the absence of compromises such as blockchain fridges and wrapped tokens, proof-of-work networks.
Bitcoin and proof-of-stake networks, such as Ethereum, are equivalent to oil and water, meaning they cannot be combined.
Babylon to Facilitate Staking on Bitcoin
A recent startup guided by a Stanford scholar and an ex-Dolby engineer is trying to refute that. Babylon is a project that aims to permit Bitcoin staking to authorize nodes on several proof-of-stake networks such as Solana, Polygon, and Ethereum. Further, the project is currently on its path to attaining its unlikely-seeming objective.
In a funding round led by Hack VC and Polychain Capital, the firm generated $18M. The amount included funds from Polygon Ventures, Castle Island Ventures, Framework Ventures, and OKX Ventures.
Further, a Polygon representative said that the firm is in ongoing talks with several blockchain platforms concerning incorporating its services, including Polygon.
Babylon Identifies Loophole to Navigate Bitcoin Blockchain
One might wonder how it might be probable, even hypothetically, for a person to stake real Bitcoin instead of a wrapped token that uses a blockchain bridge on a proof-of-stake network. Proof-of-stake networks such as Ethereum use smart contracts to control the staking process, which gifts those who deposit a specific amount of Ethereum with rewards accumulated over time.
Afterwards, transactions on the Ethereum platform are authenticated using these Ethereum deposits. The whole staking process demonstrates a complex network of if/then requirements implemented automatically by a smart contract. Nevertheless, despite smart contracts not being natively backed on the Bitcoin blockchain, Babylon claims it has identified a loophole.
The solution partly depends on Bitcoin’s ‘time lock’ process, which permits people to deposit a specific Bitcoin amount for a particular period and later withdraw it after the period without involving a third party. However, Babylon was also compelled to establish a means to circumvent the troublesome smart contract issue.
According to David Tse, an engineering don at Stanford who cofounded Babylon, the most significant problem associated with staking is that the stake is a security. He said that slashing the Bitcoin when the validator on the proof-of-state chain is not doing well has been possible.
Basically, in case all conditions were achieved, a staker would have access to collateralized funds. Further, failure to meet the conditions would result in the funds being burned or slashed. Tse claims his team has imitated the process on the Bitcoin platform in the absence of smart contracts.
Babylon Executing Slashing Innovation
Tse claimed they established a means to utilize the present Bitcoin scripting language to execute the slashing, the project’s major innovation. In case they have gotten it right, he claims they still need to make some minor technological adjustments. Afterwards, the possible advantage is significant.
All proof-of-stake blockchains could authenticate their transactions by exploiting the currently secure and circulating Bitcoin worth $838B. The innovation would be an all-but-sure deflation route for all proof-of-stake networks that might not be required to incentivize proof by providing several new tokens. Tse claimed that the Cosmos hub is paying nearly 10% to Cosmos’s security. Introducing Bitcoin might reduce security costs since Bitcoin has a bigger capital supply.
Until approval is given, Babylon will not be in a position to offer its technology to any proof-of-stake blockchain network. Hence, currently, the firm’s vision remains hypothetical.
However, as previously mentioned, Babylon is in serious talks with famous proof-of-stake blockchains such as Polygon. Additionally, it has attained the blessing of industry leaders such as Sandeep Nailwal, Polygon’s cofounder.
In a statement, Nailwal said that Babylon’s vision corresponds to its dedication to advancing decentralized ecosystems by providing varied options for communities to easily choose from. He also said they are excited about the optimistic effect the partnership is going to introduce to the blockchain community.
Polygon Welcome Babylon’s Innovative Technology
If/when proof-of-state platforms such as Polygon start embracing Babylon’s innovative technology, they might develop new constraints concerning what staking Bitcoin on their chain entails, contrary to the platform’s native token.
For instance, Ethereum might not need the minimum Bitcoin amount required to stake on the platform to be 32 ETH, the system’s present prerequisite. Additionally, it might seek to provide a lesser reward return rate for Bitcoin stakers.
Even in a situation where proof-of-stake networks that finally partner with Babylon decide to make these kinds of decisions, the demand for acquiring any passive and guaranteed return on Bitcoin might be massively attractive to Bitcoin holders across the globe.