Long push: BTC staking may be an important narrative in the second half of the year, and it is also an important opportunity to open up the BTC ecological landscape

Author: blockpunk

Original text: twitter

Note: This article is from @blockpunk2077 Twitter, and Mars Finance is organized as follows:

BTC Staking may be an important narrative in the second half of the year, and it is also an important opportunity to open up the BTC ecosystem.

made a brief introduction, welcome to forward + like.

The narrative of BTC asset launch has come to an end, and memecoin can always be played, but it is not the final form of the BTC ecosystem, and the narrative of BTC asset interest is about to become mainstream in the future.

Represented by Babylon, by staking BTC to provide economic security for other Pos chains, and obtaining income through staking, this opens up the track of BTC staking, and will also completely change the way the BTC ecology plays, from playing BTC principal to playing BTC interest.

BTC staking is driven by two important narratives, the first is to increase the yield of the overall asset, just like ETH in DeFi.

According to DefiLlama, the current market size of BTC is more than $10 billion, with yields ranging from 0.01% to 1.25%, which generally need to be entrusted to third-party CeFi institutions. The staking rewards of PoS blockchains often range from 5% to 20%, and the yield of staking BTC for other PoS chains will not be too low, and BTC Staking can get 50 times the interest-bearing income of traditional BTC, which will be a huge growth point.

The second point is really the background of BTC L2, filling in the narrative gap of L2's connection with BTC. At present, there are close to 80 BTC L2s in the market, and if the BTC mainnet block is completely filled with DA, it can carry up to 20 L2s. How do these BTC L2s, which use centralized custody bridges using assets, are not guaranteed by BTC, and are built using EVMs, convince the community to be relevant to the BTC ecosystem?

Obviously, being able to serve as a validator network for Babylon or BounceBit brings great legitimacy to BTC L2s, and at the same time, being able to eat the overflow of Staking BTC as soon as possible through PoS earning interest can obviously bring direct benefits to the token and the ecosystem.

Of course, the market conditions faced by Eigenlayer, an ETH restaking project, are different, most BTC holders are passive holders, and 67% of BTC holders have not moved for more than 1 year, so it is difficult to convince BTC holders to participate in staking.

At the same time, BTC staking is not like ETH staking with native currency-based interest, and the interest is often L2's own token, which has certain risks. Of course, some L2 companies that use BTC as gas fee also try to distribute the BTC received by the fee to staking users, but apparently this is enough to support it.

To put it mildly, the meaning of BTC L2's existence is to suck BTC deposits, and BTC staking is a more efficient way.

Thinking about the performance of BTC in addition to staking, building L3 based on existing mature L2 stakes is not a pseudo-requirement, but a must. Projects like Nubit that can make L2 capable of DA nesting, or CBK's UTXO Stack framework, will have a greater advantage in terms of technology selection.

@babylon_chain

Babylon provides POS security assurance to other blockchains through native staking on the first layer of BTC in a cryptographic way.

Babylon's staking is a closed-chain staking, where the staked bitcoins remain in a script on the Bitcoin network, and stakers can specify the validator of their choice to earn validator rewards on the corresponding POS chain.

At the technical implementation level, the Babylon staking process operates in a cryptographic manner of "extractable one-time signature EOTS", and does not rely on any third-party bridges and custodians. Babylon also functionally designed a full BTC staking with slashing, if the staker (who is also the validator of this POS chain) remains honest and only signs one valid block at a time, then it will receive the validator reward of the POS chain, and if it tries to do evil and signs two blocks at the same block height at the same time, then its EOTS private key will be reversed, and anyone can use this private key to transfer the pledged BTC on the BTC chain to achieve confiscation.

Babylon is currently undergoing testnet staking, will launch the next sBTC test in May, and will open pre-deposits in the second half of the year, and the token may be issued at the end of the year. Babylon revealed in space that it will also issue liquid assets (similar to stETH) for staking BTC, and there are @ChakraChain@LorenzoProtocol@yalaorg@SataBTC follow-up restaking, lrt, and lst projects

@ChakraChain

Chakra is BTC's staking & restaking protocol, and the BTC deposited by users will be invested in BTC staking protocols such as Babylon to obtain multiple returns. At the same time, Chakra provides a verification service maintained by Staker to provide security for BTC L2.

Chakra aggregates the signatures of a series of users through the MuSig2 protocol to generate a UTXO containing a timelock, which can "stake" bitcoins within a certain period of time to complete the staking action. Bitcoin holders do not need to transfer their BTC to any third party's escrow address, but instead achieve L1 layer self-custody through a derivative address.

There are only two conditions for unlocking BTC UTXOs after stake: one is that the Chakra network co-signs with the user and retrieves it, which may be a request for early unlocking in the Chakra network, which provides flexibility, and the second is that the initial lock-up period is reached, and the user will automatically gain control of these BTC, and users can still withdraw their BTC on time even after the Chakra network stops working.

Unlike Babylon, which also uses self-custodial BTC staking, the Chakra network does not have the ability to forfeit users' staked BTC, but instead guarantees consensus by cutting consensus rewards, which further avoids some possible false forfeitures that threaten users' BTC assets.

Chakra has also introduced ZK's capabilities to the BTC staking ecosystem, receiving investments from Starkware, ABCDE, Bixin, and Coin Summer. Testnets are currently underway and can be accessed by going to http://chakrachain.io/devnet Connect Wallet to claim the early participant credentials.

@build_on_bob

BOB is a BTC EVM sidechain architecture implemented using the OP Superchain SDK, using wrapped BTC on ETH such as wBTC, tBTC, etc. as gas fees, and will also introduce BTC security through a new POW merge mining protocol in the future.

At present, the BOB testnet has been running for several months and already has a certain ecology, the mainnet will be launched on May 1, and the first phase of deposit activity is currently underway, and the Spice points accumulated by the deposit, corresponding to the future $BOB tokens, will be directly TGE after the mainnet is launched.

To participate in BOB's pre-staking, you need to operate on the ETH mainnet, if it is BTC, you need to be cross-chain for $tBTC, $wBTC, and the yield multiplier is 1.5 times, and it also accepts DAI, eDLLR, rETH, USDC, USDT, wstETH, STONE, with a staking reward multiple of 1.3 times, and accepts ALEX, ETH, eSOV staking, with a reward multiple of 1 times.

BOB has strong resources, cooperated with $MARA, the largest listed mining company in the United States, to launch BTC L2, and has just announced a $10 million investment in Coinbase, which can be regarded as a project against Binance and bouncebit, and the TVL of BOB's first deposit is currently around $250 million, which has great potential.

@BotanixLabs

Botanix Labs has built an EVM equivalent L2 on Bitcoin, which is run by POS, and users can deposit BTC into multi-signature addresses to participate in L2 staking, or bridge BTC to L2 to participate in the ecosystem. It is characterized by the fact that these BTC assets are secured by a decentralized multisig network, Spiderchain.

You can become a validator node by staking BTC to participate in the PoS and multisig network Spiderchain, Botanix uses the Bitcoin block hash as the source, randomly selects nodes to participate in PoS block production, and a section of the implemented block header will be engraved into the BTC block to complete the final confirmation.

Botanix L2's settlement layer is BTC, its gas is also BTC from the collapsed chain, and its consensus also uses the security of BTC as a guarantee.

L2's assets on BTC are all protected by the multisig network Spiderchain, and nodes randomly form multisig groups with each other to control the BTC in the multisig address. Nodes have a higher cost of pin because their staked BTC can be slashed.

Botanix's testnet has been running for half a year now, and https://botanixlabs.xyz/en/testnet, users can participate in the test and claim a series of NFT credentials. Botanix Labs has been building L2 on BTC since 2022 and has some technical prowess, and its testnet is a good opportunity to participate.

@bounce_bit

BounceBit is a BTC-based interest-earning and restaking infrastructure. BounceBit attempts to merge CeFi and DeFi businesses in BTC yielding, and uses BTC staking to guarantee the security of the blockchain.

BounceBit itself is also a BTC EVM L2, L2 PoS staking can stake BTC assets in addition to its native token BB.

At the same time, the BTC assets absorbed by BounceBit (including BTC on the mainnet and BTCB and WBTC on BNBChain) are all hosted 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 layer of endorsement.

The BTC assets deposited by users become bounceBTC on BounceBit, and users can choose to stake these BTC to other validator networks, such as EVM chains, decentralized bridges, and oracles, to earn verification rewards from these networks.

BounceBit brings triple income to users through a series of businesses, the mainnet BTC assets are deposited into Binance and other cefi to arbitrage stable income, and users can also stake on the bouncebit chain to earn bb tokens, or restake to other validator networks to earn rewards, or used for AMM, lending and other DeFi businesses. BounceBit is backed by Binance and will give 8% of the token to Binance Megadrop's BNB stakers.

@MezoNetwork

Mezo is a BTC L2 built on tBTC, using the architecture of the Cosmos EVM to realize the asset transfer from BTC to Mzeo L2 through tBTC's multi-signature cross-chain bridge.

Mezo features the introduction of Ponzi economics known as HODL Proof, which is similar to ve33 for BTC staking. Users can lock BTC on Mezo to participate in consensus, and the longer the lock-up time, the staking verification weight obtained will increase exponentially, and the higher the rewards.

Mezo's PoS is divided into two parts, the BTC part and the native token MEZO part, both of which can get veMEZO as a reward, and the incentives are divided into different incentive pools, 1/3 of the total incentives are obtained by BTC stakers and 2/3 by MEZO stakers.

4 月 9 日,比特币二层网络 Mezo 完成 2100 万美元 A 轮融资,由 Pantera Capital 领投,Multicoin、Hack VC、Draper Associates 等参投。

Mezo has already started early deposit activity and can now deposit and withdraw native BTC, wBTC and tBTC, and is expected to launch the Mezo mainnet in the second half of 2024.

@LorenzoProtocol

Bitcoin's liquid staking protocol built on Babylon provides a rapid deployment service of L2-as-a-service. Lorenzo seeks to lower the barrier to entry for BTC staking projects such as Babylon, reduce the risk of staker slashing, and release liquidity for staked BTC assets.

Babylon is a low-level BTC staking protocol, which is similar to the native staking of ETH and may have certain requirements for a minimum amount of BTC to be staked.

At the same time, for a single user, the staking income is not stable, but there is a risk of being confiscated. Therefore, it is necessary to participate in the liquid staking protocol of BTC staking in a risk-return unit by rewarding the BTC staking pool, which is what the Lorenzo protocol does, which is similar to Lido.

Stakers can wish to participate in the staked PoS chain and deposit their bitcoins into the corresponding Lorenzo delegation vault, which is a Bitcoin multisig address.

Stakers can receive an equal amount of stBTC on Lorenzo's own chain as proof of liquidity to participate in Babylon's staking Bitcoin, and claim staking rewards from it.

The Lorenzo chain itself is protected by the Babylon Bitcoin sharing security, and the EVM-compatible Bitcoin L2 will also help more BTC L2 deployments in a modular way in the future, and the Lorenzo chain serves as a direct interoperable chain for these L2 chains.