Author & Co-Author: Kevin, Caiya — Researchers at BlockBooster
Bitcoin’s proof-of-work (PoW) consensus has traditionally limited its ability to generate yield compared to proof-of-stake (PoS) systems. However, the emergence of BTCFi is revolutionizing this landscape by unlocking new avenues for earning yield from Bitcoin while maintaining its security.
The BTCFi ecosystem comprises two primary components:
- BTC Layer: The foundational Bitcoin network.
- Restaking: Protocols enabling Bitcoin holders to stake assets for additional rewards.
Asset protocols like ARC20 and BRC20 further enrich this ecosystem. This article explores how innovative players in BTCFi are reshaping Bitcoin restaking and compares their unique advantages.
The Current Landscape of Bitcoin Restaking
Bitcoin restaking has gained traction with protocols like Babylon, Symbiotic, and CoreDAO leading the charge. Below, we break down their key innovations and competitive edges.
Babylon: Native BTC Staking Pioneer
Babylon stands out with its trustless Bitcoin staking model, leveraging Bitcoin’s UTXO system for security. Key features include:
- Remote Staking: Users stake BTC without slashing risks—only node operators face penalties.
- Timestamp Server: Records PoS chain events on Bitcoin’s blockchain for immutability.
Three-Layer Architecture:
- Base: Bitcoin (immutable ledger).
- Middle: Babylon (Cosmos-based for scalability).
- Top: PoS chains (secured by Babylon).
👉 Discover how Babylon’s staking works
Symbiotic: WBTC Restaking Leader
Backed by Lido and Paradigm, Symbiotic focuses on WBTC restaking:
- Requires transferring BTC to a custodian address.
- Currently supports 1,630 WBTC staked.
- Offers reward points to incentivize participation.
CoreDAO: Dual Staking Approaches
CoreDAO provides two staking methods:
- Native Staking: Delegating BTC to Core validators without moving funds.
- Custodial Staking: Locking BTC to mint coreBTC on the CORE chain.
Strengths and Weaknesses
| Protocol | Strengths | Weaknesses |
|----------------|--------------------------------------------|---------------------------------------------|
| Babylon | Trustless staking, Bitcoin integration | Passive reliance on Bitcoin’s security |
| Symbiotic | Strong backing (Lido/Paradigm) | Custodial dependence |
| CoreDAO | Flexible staking options | Limited to custodial model currently |
Unlike Ethereum restaking, Bitcoin restaking platforms have yet to fully harness Bitcoin’s security for PoS networks—a critical area for future growth.
The Bitcoin Restaking Ecosystem
Several protocols enhance liquidity for staked BTC:
Liquidity and Yield Platforms
- Solv Protocol: Bridges WBTC, BTCB, and BTC.b for cross-chain yield. Users earn XP points via solvBTC.
- Bedrock: Supports WBTC staking to mint uniBTC, offering dual rewards from Babylon and Bedrock.
- Stakestone: Forthcoming yield-bearing STONEBTC for cross-chain use.
- Lorenzo: Dual-token system (stBTC for liquidity, YAT for yield).
Custodial Solutions
- Lombard: Mints LBTC on Ethereum, enabling DeFi participation while earning Babylon rewards.
- PumpBTC: Custodians like Cobo handle restaking, simplifying user experience.
Security Networks
- Pell Network: Built on Babylon’s AVS, Pell boasts $200M TVL and supports diverse restaking options.
👉 Explore Babylon’s ecosystem partners
Conclusion
Bitcoin restaking is transforming BTC into a yield-generating asset, complementing its "digital gold" status. While protocols like Babylon, Symbiotic, and CoreDAO are pioneering this space, the ecosystem is still nascent compared to Ethereum’s mature infrastructure.
Key takeaways:
- Babylon leads in native BTC staking.
- Symbiotic excels in WBTC restaking with institutional backing.
- CoreDAO offers flexible staking but relies on custodians.
For asset entry, platforms like Solv, Lombard, and Lorenzo provide innovative solutions combining CeFi/DeFi incentives. As BTCFi evolves, we’ll monitor its rapid technological and ecosystem advancements.
FAQs
1. What is Bitcoin restaking?
Bitcoin restaking allows BTC holders to stake their assets in PoS protocols to earn additional rewards, enhancing liquidity and utility.
2. Is native BTC staking safer than WBTC staking?
Yes. Native staking (e.g., Babylon) avoids third-party custodians, reducing counterparty risk.
3. How does Babylon’s slashing mechanism work?
Only node operators face slashing—user funds remain secure unless unlocked prematurely.
4. Which protocol offers the highest yield?
Yield varies by platform. Pell Network and Lorenzo currently offer competitive rewards.
5. Can I use staked BTC in DeFi?
Yes. Protocols like Lombard mint LBTC for Ethereum DeFi integration.
6. What are the risks of Bitcoin restaking?
Custodial reliance (Symbiotic/CoreDAO) and smart contract vulnerabilities are primary concerns.