Babylon Bitcoin Staking Hits Limit, Sparks Airdrop Buzz

Babylon has unveiled its Bitcoin staking program, setting a new precedent in the crypto sector. This strategy allows users to own Bitcoin by providing a revolutionary way to access the $1.2 trillion asset without being regulated.

That being said, some consider Babylon to be similar to EigenLayer for Bitcoin.

Hit the high limit of Babylon Bitcoin Staking

The first stage of stock processing involves entering transactions into the Bitcoin blockchain. These transactions trigger a self-storage script that securely locks the designated BTC.

Essentially, stakeholders delegate their authority to choose Proof of Stake (PoS) instead of BTC to a chosen last-tier provider. Therefore, this arrangement allows users to participate in PoS consensus mechanisms on other chains such as Ethereum and Avalanche.

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The project has issued stake limits ranging from 0.005 BTC to 0.05 BTC. On the other hand, Babylon aims to prevent large owners from controlling the process.

“This is an intentionally small cap to encourage broad participation. It ensures that at least a few Bitcoin blocks worth of transactions are needed to fill the entire cap. This prevents one party from buying a single Bitcoin block and taking the entire cap, squeezing everyone else in the process,” Babylon explained.

The staking protocol includes a 15-month time lock equivalent to 64,000 Bitcoin blocks. They can liquidate their shares before the 1008-block lock-in period expires, adding flexibility and liquidity to the process.

At this stage, there are no direct stake awards as the PoS (Proof of Stake) chain is not yet activated. Instead, Babylon implemented a points system to track and reward user activity. However, due to regulatory restrictions, users from the US, UK and EU may not be eligible to earn points.

“This is going to be the next major airdrop farming event after Eginlayer,” said chain analyst Hitesh Malviya.

Speculation about airdrops is growing, especially since Babylon's approach resembles platforms such as EigenLayer. However, users should be aware of some legal statements from Babylon.

“Points cannot be converted into computing, any tokens or other digital assets, and can never be exchanged. Points are virtual objects with no monetary value,” Babylon warned.

However, shortly after the opening announcement, Babylon Staking reached its maximum capacity of 1,000 BTC. Although this cap is temporary, it highlights an interesting market reaction and sets the stage for future expansion.

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In June 2024, Babylon received $70 million in funding led by Paradigm and funded by Polychain Capital and Hashkey Capital. Notably, its co-founder David Tese is a professor at Stanford University.