Babylon’s Fisher Yu on Bitcoin staking, Bitcoin maxis, and the next native use case for BTC

“What Babylon does is to build native use cases for Bitcoin, and use it to empower the rest of the decentralized world.” I nod and he smiles. “This sounds very abstract. Let me give you a concrete example.”

“This implies a much greater level of risk,” Fisher explains. “Holding it and simple payment, its very safe to use, as long as you are honest and the Bitcoin chain is secure. So, Bitcoin currently only has two native use cases. Store of value and simple payment. Anything else is not native because it requires you to trust someone else or something else.”

millions of Bitcoin

More Native Use Cases for Bitcoin

“What we achieved is to make Bitcoin stakeable,” he says. “HODLers can stake BTC to secure other blockchains, rollups, and decentralized systems, and provide Proof-of-Stake-like security while earning staking rewards from those systems.”

The Rise of the Babylon Empire

“In theory, you need about six BTC blocks to fill those 1,000. They were filled in 5.5 blocks. That means for that hour, the entire Bitcoin chain, 99% of the transactions were Bitcoin staking transactions to Babylon.” He laughs, “We hijacked the Bitcoin chain for an hour.”

“We opened our staking for 10 BTC blocks, which is roughly one hour and a half,” he says, “and decided that we would accept any staking transaction within these 10 BTC blocks.” The result？

Understanding the Risks

“More specific to our protocol is something called slashing risk. Proof-of-Stake can provide security as the staker protects the chain, but if you backstab the chain instead of securing it, your stake can actually be slashed. This is why Proof-of-Stake can provide security because it deters the staker from attacking the chain by making the stake slashable. So there is a slashing risk of your Bitcoin.”

“The good thing is that as long as you don‘t attack the peer-to-peer, your Bitcoin is safe, and as long as you don’t delegate your voting power to a validator who attacks the chain you are supposed to secure, then your Bitcoin is fine.”

In Bitcoin We Trust

“The only trust is in Bitcoin. In Bitcoin we trust. So we are building native use cases for Bitcoin.”

Osmosis founder Sunny Aggarwal

“Sunny was thinking about a very long-term vision. Since the Bitcoin mining reward halves every four years, unless the Bitcoin price goes up by many, many folds, then the mining reward will not be able to cover the Bitcoin mining cost. At that time, what do you do？ What does Bitcoin do？ Where does Bitcoin go？ If miners cannot cover their costs, the only thing they can do is shut down their mining machines. Then Bitcoin has to close down. Then its not secure anymore.”

“So in this direction, Babylon is super relevant, but when Bitcoin staking is adopted widely, I think this doesn‘t have to be the only path. Remember, there are transaction fees that Bitcoin miners can collect. Also, once Bitcoin staking is adopted, the miners can actually stake their Bitcoin and earn yield. So the yield they earn can be used to cover their mining costs and they don’t have to shut down their machines.”

Plans for the Year Ahead

“After that, we will turn the Babylon chain into a marketplace where Bitcoin holders can stake to all the other decentralized systems I mentioned.”

“We chose the name Babylon as the chain will eventually become a marketplace where Bitcoin holders can find use cases and consumers will come to Babylon to enjoy the use cases. So this is our goal for the next year.”

“We will be able to bring the mainstream institutes, users, and capitals to the crypto world because Bitcoin has become mainstream, it attracts new users, new capital, and new institutions, and Bitcoin staking will be their natural choice.”

“We wish in five to ten years when everyone in the world talks about Bitcoin, the first word they say is Bitcoin. The second they say is Babylon.”