1. Babylon Chain project background

Babylon Chain is a project that brings the strong security of the Bitcoin network into the decentralized world. Through the innovative solution of ‘Bitcoin Staking,’ Bitcoin holders can directly lock their Bitcoin on the native Bitcoin network without any cross-chain bridges or wrappers, and ‘contribute’ the staked Bitcoin to the PoS blockchain in exchange for corresponding block rewards or ecosystem incentives.

From a business perspective, Babylon Chain focuses on decentralized security services and a shared security market, deeply integrating the economic security of Bitcoin with decentralized applications in a way that ‘does not require leaving the Bitcoin original chain’.

According toOfficial WebsiteInformation, the core goals of this project include:

• Bring the security of native Bitcoin to emerging PoS blockchains or application chains;
• Provide native, self-controlled staking pathways for Bitcoin holders to earn rewards from other blockchains or applications;
• Build a secure shared network with “multi-chain interoperability + Bitcoin collateralization” to enhance the overall security and scalability of decentralized applications.

Source:Official Website of the Project

2. Babylon Chain Technical Principles

The key to Babylon Chain’s ability to achieve ‘Bitcoin native staking’ lies in the combination of a series of smart scripts deployed on the Bitcoin network and the Cosmos SDK Appchain architecture. Here are several key points of Babylon Chain’s technology:

2.1 Bitcoin Script and Timelock Mechanism

Babylon Chain uses a custom Bitcoin script that allows users to lock a certain amount of BTC in a specific contract address (commonly referred to as a UTXO contract) and specify the lock time. The locking contract has the following features:

1. Self-custody: The entire locking process does not require transferring BTC to a third party or cross-chain bridge, but is controlled by the user’s own private key.
2. Freedom to request unlocking: Users can initiate an unlocking request at any time once the lock-up period ends, and retrieve the locked Bitcoin.
3. Can be verified by the PoS chain: Babylon Chain will regularly record the timestamp of the latest blocks on the Bitcoin network on Babylon Chain to ensure the consistency of information between the PoS chain and the Bitcoin chain.

2.2 EOTS and Economic Penalties

In order for Bitcoin to assume the “staking” function of the PoS system, it needs to have a certain degree of “penalization.” Babylon Chain has introduced the EOTS mechanism:

• When a validator misbehaves on the PoS chain, the system triggers a script to expose the locked BTC private key in a specific contract to the public network, allowing anyone to call the private key and transfer this portion of BTC to the penalty address, thus achieving the true meaning of ‘Bitcoin collateral punishment’.
• Compared to the traditional PoS, where penalties are limited to the native tokens, Babylon Chain implements a Bitcoin-level value guarantee. Once the cost of misbehavior is extremely high, it can greatly enhance the security of the decentralized network.

2.3 Bitcoin timestamp and cross-chain access

Another core technology of Babylon Chain is the Bitcoin timestamp. This mechanism allows the block headers or key information of all PoS chains to be periodically recorded on the Bitcoin blockchain, forming proof of the “correct historical state”.

• Once a PoS chain or application chain forks or is attacked, the community can rely on Bitcoin timestamps to trace back to the latest record in the Bitcoin block, quickly determining which chain is the legitimate one.
• This cross-chain interoperability, especially in combination with the Cosmos ecosystem, means that developers can obtain proof of state on the Bitcoin network through the IBC protocol, enabling deeper cross-chain applications.

3. Babylon Chain Market Trends and Latest Developments

With the explosion of DeFi, NFT, gaming, and other sectors, the blockchain industry’s demand for ‘security and scalability’ is increasing day by day. Babylon Chain has attracted widespread attention recently with its innovative ability to ‘native BTC staking’.

As of now (March 17, 2025), the main trends and developments of Babylon Chain include:

Bitcoin collateral scale continues to expand

Based onOfficial Staking DashboardAs of March 17th, the Bitcoin collateral confirmation TVL is approximately 53049.42 BTC, worth around 43.9 billion US dollars.

Source:Babylon - Staking Dashboard

Multiple iterations during the test network phase

The official blog shows（Babylon Phase-2 Testnet LaunchAnnouncement), Babylon Chain has officially launched Phase-2 testnet (bbn-test-5) on January 8, 2025. This testnet focuses on verifying the registration function of the new generation PoS on-chain Bitcoin staking, as well as a more comprehensive developer toolchain.

Source:Babylon Phase-2 Testnet Launch

Attracting multiple investment institutions

The project has raised $70 million in early funding to drive core protocol development and ecosystem construction. This round of financing was led by Paradigm, with other participants including Polychain, Breyer Capital, Framework Ventures, Binance Labs, and other well-known industry institutions.

Ecological Partners and Applications

Based on the Babylon Chain ecosystem, developers can utilize CosmWasm to deploy smart contracts; some wallets in the Cosmos ecosystem have already integrated the test network function of Babylon Chain, providing verification interfaces for reading block timestamps from the Bitcoin network.

Multiple decentralized applications (dApps) are exploring integrating Babylon Chain’s security services into their systems, such as distributed oracles, decentralized trading protocols, cross-chain bridges, etc.

4. Babylon Chain investment opportunities and risks

4.1 Investment Opportunities

• The differential value brought by native Bitcoin collateral

  Babylon Chain allows BTC staking without the need for any Wrapped BTC or cross-chain bridges, reducing security risks; for investors who believe in the long-term value of Bitcoin, Babylon Chain provides additional profit channels and market demand.

• Cosmos ecosystem support

  Cosmos SDK emphasizes modularity and cross-chain compatibility, Babylon Chain can interoperate with other Cosmos Zones, which means potential ecosystem expansion and more use cases.

• High-profile and investment background

  Led by distributed systems experts from Stanford, USC, and other top funds, with strong advantages in academic and industrial resources.

• Security and liquidity combined

  Providing a decentralized and economically significant secure source, allowing emerging PoS chains to enjoy Bitcoin security without significantly diluting local tokens. Bitcoin holders may also gain diversified sources of income.

4.2 Potential Risks

• Technical Maturity:

  While the concept of BTC staking is innovative, its script complexity is high, and it requires a large amount of security audits and testing. If major vulnerabilities are encountered after the mainnet launch, it may result in BTC being unable to unlock normally or being attacked.

• Market competition and uncertainty:

  Layer2, cross-chain bridges, and other solutions emerge endlessly, while the Babylon Chain’s EOTS mechanism and Bitcoin timestamp, whether they can be widely adopted, still need to be verified by the community and the market.

• Compliance regulatory risk:

  Regulatory policies for BTC staking and PoS ecosystems vary globally, and project expansion may face resistance in jurisdictions with strict restrictions on such operations.

• Ecological application is scarce:

  Currently, the main focus is on the test network and underlying security protocols, if there are no more actual applications landing in the future, Babylon Coin may also lack value support.

5. Summary of Babylon Chain

Babylon Chain combines Bitcoin with the PoS ecosystem, creating a new model of empowering multiple chains with “native BTC staking.” For Bitcoin holders, it not only provides an opportunity for self-custody and external rewards without the need for cross-chain bridges; for emerging PoS projects, it introduces the security backing of the world’s deepest and most powerful economic entity (Bitcoin). Once Babylon Chain further matures, continues to attract attention from developers, institutions, and communities, forming an ecosystem with various applications such as DEX, oracle, NFT, games, etc., its influence in the blockchain world may be significantly enhanced.

At the same time, Babylon Chain still needs to face many challenges in terms of technical security, market acceptance, and compliance. Whether for investors or developers, when participating in any new project, they should act cautiously based on their own risk preferences and research judgments. If Babylon Chain’s mainnet goes live in the future and is widely used, it may usher in a new era of Bitcoin economy, expanding the value of BTC from ‘digital gold’ to a wider range of DeFi and decentralized application scenarios.