The cryptocurrency industry is witnessing a significant development as Nomic, a decentralized Bitcoin bridge, unveils its plans to integrate Babylon’s pioneering Bitcoin staking protocol. This partnership aims to introduce stBTC, a groundbreaking Bitcoin Liquid Staking Token (LST), further expanding the capabilities of the Cosmos ecosystem.
TLDR
- Nomic, a decentralized Bitcoin bridge, is introducing stBTC, a Bitcoin Liquid Staking Token (LST), powered by Babylon’s Bitcoin staking protocol.
- stBTC allows Bitcoin holders to stake their BTC and earn yields while retaining liquidity, enabling the use of staked BTC in Cosmos DeFi protocols.
- Nomic’s integration with Babylon will make Nomic a dual-stake secured blockchain, secured by both staked NOM (Nomic’s native token) and staked BTC.
- Stakers on Nomic can earn rewards in both NOM and nBTC (an IBC-compatible tokenized version of BTC).
- Babylon is a blockchain project focused on developing security-sharing protocols for the decentralized economy, leveraging Bitcoin’s asset, timestamping, and censorship-resistant blockspace.
Liquid Staking Tokens (LSTs) have gained substantial traction in the crypto industry, with the category surpassing $50 billion in total value locked, according to DefiLlama. LSTs enable users to stake their assets while retaining access to the liquidity of those assets. For instance, stETH, an Ethereum LST, allows users to stake their Ethereum and earn yields while maintaining the flexibility to use their staked assets in various DeFi protocols.
Nomic’s stBTC follows a similar concept but applies it to Bitcoin, a cryptocurrency that has traditionally been challenging to integrate into DeFi protocols due to its lack of native staking capabilities. By leveraging Babylon’s Bitcoin staking protocol, Nomic introduces a new avenue for Bitcoin holders to stake their BTC and earn yields while simultaneously benefiting from the liquidity of their staked assets within the Cosmos ecosystem.
The process begins with Nomic’s decentralized BTC reserve, which enables users to exchange their BTC for nBTC tokens. These nBTC tokens are freely movable across any IBC-compatible chain, a significant advantage over traditional Bitcoin staking methods that lock BTC in a UTXO, rendering it non-transferable until a specified time or event. Through Nomic’s Staking Pool, users can lock their nBTC to mint an equivalent amount of stBTC tokens, which, like nBTC, can be utilized throughout the Cosmos ecosystem.
Redeeming stBTC involves unlocking the tokens, which can then be exchanged for BTC or nBTC. Additionally, stakers receive periodic rewards via IBC Interchain Account transactions, further incentivizing participation in the staking process.
https://twitter.com/babylon_chain/status/1777946476666302910
Nomic’s integration with Babylon extends beyond the introduction of stBTC. It also expands upon Nomic’s cutting-edge security model, making it one of the first Proof-of-Stake (PoS) chains to implement Babylon’s Bitcoin staking solution. This integration will result in Nomic becoming a dual-secured blockchain, secured by both staked NOM (Nomic’s native token) and staked BTC via Babylon. Users who stake their Bitcoin via Babylon to Nomic will earn rewards in both NOM and nBTC, redeemable for BTC, a feature unique to Nomic.
Babylon, the project behind the Bitcoin staking protocol, is a blockchain initiative focused on developing security-sharing protocols for the decentralized economy. Founded in 2022 by Stanford Professor David Tse and Dr. Fisher Yu, Babylon aims to leverage Bitcoin’s asset, reliable timestamping service, and censorship-resistant blockspace to create a more secure and decentralized future.
Babylon’s mission is to scale Bitcoin to secure the decentralized economy. To achieve this, the project is developing three innovative security-sharing protocols: the Bitcoin Staking Protocol, the Bitcoin Timestamping Protocol, and the Bitcoin Data Availability Protocol. By leveraging these protocols, Babylon envisions a more secure and decentralized future for the cryptocurrency industry.
Introducing $stBTC, a Bitcoin Liquid Staking Token powered by @babylon_chain.https://t.co/b7duK3MBVs
— Nomic (@nomicbtc) April 10, 2024
The integration of Babylon’s Bitcoin staking protocol into Nomic’s decentralized Bitcoin bridge represents a significant step forward for Bitcoin holders, providing them with the opportunity to earn yield through staking while also contributing to the security of Proof-of-Stake systems like Nomic.
As Matt Bell, CEO of Turbofish, Nomic’s founders and core contributors, stated,
“Nomic and Babylon provide two important primitives to Bitcoin: decentralized custody and staking. By pairing the two, their impact is magnified, making a more practical solution for the average Bitcoin holder to earn yield through staking. With innovations like stBTC emerging, Bitcoin DeFi now has the potential to compete with the trading volumes and total value locked of Ethereum DeFi.”
While stBTC is currently active on testnet, allowing users to experience its functionality and benefits before its official mainnet release, this development represents a significant milestone in the evolution of Bitcoin’s integration into the rapidly growing DeFi ecosystem.
