Bitcoin staking is emerging as one of the most important innovations in crypto infrastructure. It enables Bitcoin, traditionally seen as a passive store of value, to play an active role in securing Proof-of-Stake (PoS) networks—while generating yield for holders. Until recently, Bitcoin’s consensus model made it incompatible with staking. Now, new protocols are unlocking the shared security economy for Bitcoin.
The Challenge: Securing PoS Networks
PoS chains rely on economic security to remain resilient against attacks. The more capital that is staked, the harder it is to compromise the network. But attracting this capital is expensive. Many PoS networks use high inflation to incentivize staking, diluting token value and hurting long-term sustainability.
Bitcoin, by contrast, has the largest market cap and deepest liquidity in crypto—but it’s been largely excluded from this security economy. It’s not designed for staking, and most of the Bitcoin that has been used in DeFi is wrapped via centralized bridges, which introduces counterparty risk and friction.
Babylon’s Breakthrough: Native Bitcoin Staking
Babylon introduces a protocol that enables Bitcoin to be staked natively to secure PoS networks and decentralized applications. Inspired by Ethereum’s EigenLayer, which allows restaking of ETH to provide shared security, Babylon brings this concept to Bitcoin. But it does so without requiring BTC to be bridged or wrapped.
Bitcoin remains on its native chain. Yet through cryptographic mechanisms and slashing guarantees, Babylon makes it possible for BTC to serve as economic security. Validators who misbehave risk having their staked BTC slashed. This introduces a new class of crypto-economic security—one that leverages Bitcoin’s stability and scale to protect PoS systems.
The result is a two-sided market: Bitcoin holders earn staking rewards, while PoS chains get access to a more robust and cost-effective security layer.
The Role of Liquid Staking and Restaking
While Babylon provides the foundational infrastructure, liquidity is critical to adoption. Staked assets—if locked—limit user participation in DeFi and restrict flexibility. That’s where liquid staking tokens (LSTs) and liquid restaking tokens (LRTs) come into play.
Built on top of Babylon, these tokens allow users to stake BTC and receive a liquid token in return—maintaining exposure to both staking rewards and DeFi opportunities.
Here’s a breakdown of the leading liquid staking solutions emerging on Babylon:
- LBTC (Lombard Finance):
- Offers native staking yield and is integrated with DeFi protocols like Pendle and Morpho.
- LBTC has a growing market cap and is actively used in DeFi, paired with wBTC in liquidity pools.
- Current TVL: $1.73b
- SolvBTC (Solv Protocol):
- Enables liquidity across multiple networks, including Bitcoin mainnet, Ethereum, and BNB Chain.
- Current TVL: $1.26b
- PumpBTC:
- Provides immediate liquidity tokens without waiting periods
- Current TVL:.$500m
- Bedrock:
- A multi-asset liquid restaking protocol supporting BTC, ETH, and other assets.
- Current TVL:$106m
These tokens leverage Babylon’s infrastructure to enable trustless staking and restaking of Bitcoin, unlocking new yield opportunities while maintaining liquidity.
Why This Matters
EigenLayer proved that restaking is a viable model—$8 billion in total value locked shows the demand is real. Babylon and the liquid restaking protocols are doing the same for Bitcoin. They’re turning BTC into productive capital—without compromising on decentralization or security.
This is more than a technical achievement. It’s a new paradigm for Bitcoin, one where BTC can earn yield, secure the future of Web3, and remain true to its roots.
