Cryptocurrency startup Babylon has, in its recent statement, confirmed the development of a mechanism to facilitate Bitcoin staking compatible with proof-of-stake (POS) blockchains.
Babylon weighed in on the essential truths that dictate thoughts on blockchain networks. One such critical truth is that failure to integrate compromises such as the wrapped tokens and blockchains leaves the POS networks and proof-of-work (POW) incompatible.
Babylon Eradicating POW and POS Incompatibility
The newly established Babylon by the former Dolby engineer Fisher Yu disapproves of the incompatibility chain. Babylon involves an initiative allowing users to execute Bitcoin staking and validate notes on various proof-of-stake networks, including Polygon, Solana, and Ethereum.
Babylon revealed in its recent statement that it is edging closer to realizing the improbable objective. The initiative follows the conclusion of a $18 million funding round steered by Hack VC and Polychain Capital.
The round saw various funds participate, including Polygon Ventures, Castle Island Ventures, Framework Ventures and OKX Ventures.
The participants hailed Babylon’s breakthrough at a time when it was holding conversations with several blockchain networks regarding integrating startup services. Polygon Labs admitted via its spokesperson that it participated in the recent round of talks.
Proof-of-stake networks such as Ethereum have smart contracts governing the staking process. The process facilitates rewarding users depositing Ethereum within the network over time.
The ETH deposits help the network in validating transactions. The staking process involves an integrated web featuring if and conditions automatically executed using smart contracts.
The Bitcoin blockchain does not natively support smart contracts. Nonetheless, Babylon confirms discovering a workaround.
The startup disclosed that the solution relies on the time lock mechanism in Bitcoin that facilitates users to deposit BTC for a defined period.
The period lapse allows users to withdraw the BTC without relying on a third party.
Babylon Overcoming Pesky Smart Contract Challenge
Babylon admitted the need to overcome the pesky smart contract challenge. The Stanford engineering scholar who co-founded Babyblon attributed the greatest challenge for staking to the awareness that the stake constitutes the collateral.
Tse added that one must be able to slash the Bitcoin whenever the validator on the POS chain derails.
A smart contract accommodates the release of collateralized funds whenever the staker fulfills the conditions or buns if unmet. Tse indicates that the Babylon team has successfully replicated the process without deploying smart contracts on the Bitcoin network.
Tse confirmed discovering a mechanism to leverage the existing Bitcoin scripting language to realize the slashing. Such constitutes the primary innovation of the project.
While the Babylon team led by Tse has the facts right in the project, they would need the final tweaking. By doing so, the potential for the startup is enormous.
The Babylon project’s success could enable the POS blockchains to tap into the secure Bitcoin valued at $830 billion to validate the transactions.
The innovation would deliver a certain path towards deflations for the POS networks. They would no longer need the issuance of new tokens to incentivize validation.
Tse illustrated that Cosmos hub incurs 10% of the token price, prompting an equal 10% exchange value for the Cosmos’ security. By integrating Bitcoin, Babylon can potentially lower the security cost, given its ample capital supply.
Babylon will not manage to offer the technology to the POS blockchain ecosystem until the governance consents. Such implies that the company’s vision is theoretical.
Babylon Conversations with POS Blockchains
Babylon is holding serious conversations with the leading POS blockchains, such as Polygon. It received blessings from industry leaders and Polygon co-founder Sandeep Nailwal.
Nailwal indicated in a subsequent statement that Babylon’s objective aligns with Polygon’s commitment to fostering decentralized ecosystems. Doing so yields diverse options, allowing the communities to choose seamlessly.
Polygon hails the collaboration that would undoubtedly positively impact the blockchain community. Adopting Babylon’s technology by POS, such as Polygon, may create new parameters for staking BTC on the chain and not its native token.
The Babylon technology will eradicate the need to meet the BTC amount matching 32 ETH to stake on Ethereum. Ethereum could also decide to lower the rewards return rate granted to BTC stakers.
Even where the POS networks eventually embrace Babylon and deploy such choices, receiving passive returns on Bitcoin would become immensely attractive to the holders globally.
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