Babylon: Bitcoin staking as EigenLayer-style security sharing for PoS chains
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Explains Babylon's remote staking: BTC is locked in Bitcoin scripts and slashed for violations on consumer PoS chains, with Babylon acting as an IBC control plane. Contrasts it with EigenLayer, since Bitcoin has no smart contracts for slashing.
Key claims
BTC is a roughly $600B asset, mostly idle
Slashing is built with Bitcoin scripting plus advanced cryptography, not smart contracts
Timestamps aggregate over IBC for any Cosmos SDK chain
Hours I have spent researching Bitcoin innovation.
In the process, I found a crazy alpha play! Are you ready for @eigencloud-style (re)staking for BTC anon?
🔥 PoS chain with Bitcoin staking
🔥 Base layer for BTC restaking
🔥 CosmWasm execution
🔥 IBC Interoperability
Alpha-🧵
1/ Building a ZK rollup on Bitcoin is cool. However, it does come with certain complexities.
That's why the alpha play I identified through my research, takes a different approach to leverage BTC for network security.
Think @eigencloud or @Picasso_Network. This one will be big!
2/ 🤔 Why is building a rollup on Bitcoin hard?
ZK rollups build on top of Bitcoin's blockchain architecture itself.
They face programmability limitations and slow block times that have to be countered with off-chain work-arounds & client-side state verification mechanisms.
3/ 🤔 What is the alternative?
Let's think about how we secure blockchains.
⛏ Proof of Work
💰 Proof of Stake
While the former relies on 51% attacks being computationally expensive, the latter relies on an economic stake that can be slashed in the case of malicious behaviour.
4/ Bitcoin is a PoW network and is the most battle-tested and decentralized network out there. It hence provides robust security guarantees.
But Bitcoin is also a $600 Billion asset and most of it is idle capital.
5/ Let me introduce you to the concept of Bitcoin staking.
This allows BTC holders to stake their idle BTC capital to increase the security of PoS chains and earn yield in the process.
6/ Yes you heard right.
I'm talking about a Bitcoin staking protocol which allows bitcoin holders to trustlessly stake their bitcoins.
Without bridging them to the PoS chain, the chain still provides full slashable security guarantees.
7/ This is done through remote staking.
Lock staked BTC in a contract on the Bitcoin chain & slash the stake when there is a protocol violation on the consumer PoS chain.
This is the approach used in security sharing solutions such as @eigencloud’s Ethereum restaking protocol.
8/ The staking protocol is designed as a modular plug-in for use on top of many different PoS consensus algorithms.
It also provides a primitive upon which restaking protocols can be built.
9/ This takes BTC from no yield to staking yield + restaking yield and enables arbitrary programs (not feasible on Bitcoin itself) to be secured by idle BTC capital!
The protocol also supports fast stake unbonding to maximize the liquidity for bitcoin holders.
10/ Have you guessed the project already?
Exactly, it's @babylon_chain!
A Cosmos SDK based PoS chain secured by Bitcoin that runs a @CosmWasm execution environment to let devs build secure dApps.
11/ But the vision goes beyond a singular chain.
@babylon_chain proposes a network architecture for scaling the protocol to many stakers and many PoS chains.
The Bitcoin-staked Babylon chain would act as a control plane to synchronize between Bitcoin and the PoS chains.
12/ Let's elaborate on that a bit!
Every existing PoS chain is secured by the native asset that is maintained in the ledger of the chain.
For example, PoS Ethereum is secured by ETH, Cosmos Hub is secured by ATOM, and BNB Chain is secured by BNB, using only the native token.
13/ This upper-bounds the economic security of the PoS chain by the market capitalization of the native token.
Staking of remote crypto assets instead of or in addition to the native asset on a PoS chain provides an avenue to improve the chain’s security.
14/ This is enabled with x-chain staking approach described earlier (remote staking).
Staked foreign assets remain on their own chain, locked in a staking contract of a validator of the chain it's securing.
Staked assets are slashed if the validator commits slashable offenses.
15/ As mentioned before, @babylon_chain's cross-staking protocol is inspired by @eigencloud’s Ethereum restaking concept.
The idea is to take staked ETH on PoS Ethereum & restake it to secure middleware (Actively Validated Services) such as DA layers, bridges, oracles, etc.
16/ This marks the beginning of a new era in which a crypto asset can be used to secure chains and services other than its own chain.
Generally, @babylon_chain's Bitcoin staking protocol can be viewed as an example of a cross-chain staking protocol.
17/ However, there are two important differences to @eigencloud's Ethereum restaking.
1️⃣ In Ethereum restaking the asset is already staked to secure the provider chain. In contrast, Bitcoin is secured by PoW rather than by the Bitcoin asset itself.
18/
2️⃣ There are no smart contracts on Bitcoin to implement the stake slashing.
Instead, @babylon_chain optimizes the use of the Bitcoin scripting language and uses an advanced cryptographic mechanism to achieve the same goal.
19/ To act as the before-mentioned coordination layer, the chain leverages the standard IBC (inter-blockchain communication) protocol.
This enables efficient timestamp aggregation for any number of Cosmos SDK chains.
20/ This is very big anon.
It's making the vision of asset-agnostic cross-chain staking and programmable execution layers secured by BTC a reality.
Personally, this is definitely a Bitcoin play I will keep a close eye on!
I hope you've found this thread helpful! 🫡
Make sure to follow me @zerokn0wledge_ to stay up to date on everything around modularity, rollups, restaking & disruptive blockchain tech!
Like/Repost of the below post is also highly appreciated! 🙏👇
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