With the launch of BTC Liquid Restaking on May 2nd and the excitement of Babylon BTC Staking Testnet going to Mainnet, Bedrock has created uniBTC, the universal token of Bitcoin. But a key question remains: what exactly is uniBTC, and how does it benefit Bitcoin holders?
This article breaks down what uniBTC is all about, its advantages, and what it means for BTC holders like you.
Introduction
Traditionally, staking is a feature of Proof-of-Stake (PoS) blockchains. Here, validators lock up their crypto to validate transactions, secure the network, and earn rewards in return. Bitcoin, however, relies on miners who use computing power, not staked coins. There wasn’t a way for Bitcoin holders to participate in a PoS-like system without giving up custody of their BTC. Then Babylon Chain did something new.
Babylon Chain acts as a bridge between Bitcoin and PoS blockchains. Here’s the magic:
Self-Custody Staking: You hold onto your bitcoin using a compatible wallet. Babylon Chain doesn’t take custody of your coins.
Security for PoS Chains: Babylon uses a clever system to use the security of the Bitcoin network to benefit PoS chains for more security without relying solely on their own token.
Earning Rewards: By “staking” your bitcoin through Babylon, you contribute to the security of PoS chains and earn rewards in return.
Why uniBTC?
While staking directly on Babylon Chain offers various rewards, uniBTC by Bedrock adds more benefits:
Liquidity: Staking directly on Babylon may lock up your BTC assets, making them illiquid. In contrast, you can trade uniBTC on various decentralized and centralized exchanges as long as there’s sufficient liquidity.
Simplified Process: Bedrock simplifies wBTC staking by allowing you to stake wBTC on Ethereum, taking advantage of Ethereum’s extensive DeFi ecosystem and security features
Yield Generation: By minting your wBTC into uniBTC, you can earn multiple rewards, including staking rewards and potential booster Diamond points, enhancing your overall yield.
Flexible Staking Options:
Bedrock’s proxy staking and direct conversion allow for flexibility and interoperability between Ethereum and the Babylon network, providing you with more options for staking their assets
Track Record: Bedrock’s battle-tested protocol, operational for over a year with more than 10k ETH staked and unstaked smoothly, demonstrates stability, security, and reliability in the liquid staking space.
The Mechanics of uniBTC
Bedrock lets you stake wBTC tokens for uniBTC on Ethereum to earn rewards on your wBTC without selling it. For every wBTC token staked, one unit of uniBTC is minted and allocated to your address. While there’s no mandatory minimum for staking, we suggest staking at least 0.005 wBTC to cover transaction fees.
BTC Staking Process
When you deposit a Wrapped Bitcoin (wBTC) token into Bedrock, the protocol initiates a process where an actual bitcoin (BTC) token is staked to the Babylon network in real-time to ensure that your staked wBTC is securing the Babylon network and earning rewards. For flexibility, interoperability, and seamless staking, either of these two approaches are used:
a. Proxy Staking: The Proxy Staking approach follows five steps:
- User Deposits Wrapped Bitcoin (wBTC): You start by depositing wBTC into Bedrock.
- wBTC Enters the Vault-on-chain: Your wBTC is transferred to a secure, multi-signature vault on the Ethereum blockchain. This vault is jointly controlled by Bedrock and other trusted entities, ensuring the safety of your funds.
- Proxy Staking on Babylon Network: Behind the scenes, Bedrock uses a proxy which mirrors your wBTC on the soon-to-launch Babylon network, a separate blockchain designed for Bitcoin staking.
- Earning Rewards on Babylon Network: The proxy stakes your wBTC on Babylon network to earn staking rewards, which are proportional to your wBTC holding.
- Receiving Rewards as uniBTC: Rewards are given to you in uniBTC tokens. UniBTC represents your staked wBTC on Bedrock and reflects the value of your underlying Bitcoin holding.
b. Direct Conversion:
Alternatively, in Direct Conversion, wBTC tokens are instantly converted into BTC tokens which are then staked directly onto the Babylon network without needing a proxy. This streamlined process ensures immediate conversion and staking, enhancing efficiency.
How to Get Started
To get started with BTC restaking, all you need is Wrapped bitcoin (wBTC). Whether you’re a first-time BTC restaker or new to restaking altogether, the process is as simple and accessible as described below:
- For First-Time BTC Restaking Users:
If you’re new to BTC restaking, the first step is getting Wrapped Bitcoin (wBTC) through various decentralized or centralized exchanges that support its trading pairs. Once you have wBTC in your wallet, you’re ready to begin the restaking process using this guide.
- For First-Time Restakers Who Aren’t BTC Holders:
If you’re new to restaking and do not hold BTC, get it through a cryptocurrency exchange. You can purchase wBTC using other cryptocurrencies or fiat, depending on the exchange’s supported trading pairs. Once you have obtained wBTC, you can proceed with the restaking process as outlined here.
Rewards
BTC restaking offers several benefits such as:
- Passive Income: No need to give up control of your BTC. You keep your coins safe while earning extra money.
- Increased Exposure: Your Bitcoin remains part of the main Bitcoin system, even while it’s busy generating rewards for you.
- Help secure other networks: By staking your Bitcoin, you contribute to the security of other blockchains and get rewarded for it.
- Skip the technical stuff: Depending on the system you use, you can avoid managing your own staking process and just let someone else handle it for you (for a small fee).
- Security and Transparency: Staking wBTC in reputable protocols like Bedrock offers security and transparency, as all transactions and rewards are recorded on the blockchain. You can verify staking activity and rewards through blockchain explorers like Etherscan.
Of course, there’s always a little risk involved:
- Different rules for different chains: Each blockchain has its own set of staking rules. We recommend understanding these rules before staking on that specific chain.
- Waiting period: There’s a short waiting period before you can withdraw your bitcoin from Bedrock.
- New technology, new risks: Bitcoin staking on smart contracts is a relatively new concept. While Bedrock uses advanced security measures, there’s always a chance of technical issues.
”Why should I Start Restaking BTC Now?”
- Early Adoption Advantage: Getting involved early allows you to benefit from higher staking rewards and potential appreciation of staked assets as the ecosystem matures.
- Capitalize on Market Growth: As the cryptocurrency market continues to expand, the demand for staking services is expected to increase. Starting BTC restaking now lets you capitalize on this growth and maximize its returns over time.
- Risk Reduction: Staking wBTC in reputable protocols reduces the risk associated with traditional trading and investment strategies. By earning staking rewards, you can offset potential losses and enhance the overall stability of your investment portfolios.
The Future of BTC Restaking
As BTC restaking gains traction and solidifies its position in the staking industry, we expect several developments such as:
- Expanded Ecosystem: Like a tree, the BTC restaking ecosystem is expected to grow as more protocols offer staking services for wrapped BTC tokens. This expansion will provide a wider range of options and opportunities to maximize staking rewards.
- Integration with DeFi: BTC restaking protocols may integrate with decentralized finance (DeFi) platforms, allowing you to use your staked assets as collateral for loans, liquidity provision, and other DeFi activities. This integration will enhance the utility of staked assets and unlock additional earning potential.
- Innovative Staking Mechanisms: As technology advances, new staking mechanisms and strategies may emerge, offering innovative ways to earn rewards and optimize staking portfolios. These advancements will drive further adoption of BTC restaking and contribute to the growth of the overall staking industry.
EigenLayer vs Babylon
Concept and Success
Traditionally, staking was limited to Proof-of-Stake (PoS) blockchains like Ethereum (ETH) where users directly locked up their tokens to validate transactions and earn rewards. However, the emergence of restaking protocols like EigenLayer and Babylon is unlocking staking opportunities for Proof-of-Work (PoW) blockchains like Bitcoin.
Assuming history repeats itself, let’s compare EigenLayer’s success with ETH restaking and a $14.478b TVL (As of May 11, 2024) since its launch in 2023 to the potential of Babylon’s upcoming BTC restaking, and ultimately help you choose the best asset for staking.
EigenLayer and Babylon Protocol are revolutionizing concepts of yield generation, security, decentralization, and interoperability. Let’s delve into the details, exploring their mechanics, applications, partnerships, and broader implications for the blockchain industry.
Yields/Rewards Mechanism:
EigenLayer introduced the concept of restaking, which allows you to earn additional rewards by reusing your staked assets to secure multiple services simultaneously. This restaking mechanism is powered by smart contracts and enables you to optimize your yield generation strategies while maintaining security and decentralization.
On the other hand, Babylon Protocol focuses on Bitcoin staking, providing a solution for BTC holders to earn yields on their assets without compromising security or decentralization. Through Babylon, you can stake your wrapped BTC tokens and earn rewards, using the value of your BTC holdings to generate additional income.
Security and Decentralization:
EigenLayer uses Ethereum’s pooled resources to enhance security for decentralized services, while Babylon Protocol implements a secure time lock mechanism to protect staked BTC assets.
Furthermore, EigenLayer and Babylon Protocol embrace decentralization by enabling trustless collaboration between network participants. You retain control over your assets through non-custodial solutions, while protocols use smart contracts and multi-signature wallets to enhance secure transactions and consensus mechanisms.
Protocols, Partnerships, and Integrations:
EigenLayer and Babylon Protocol are supported by a diverse ecosystem of protocols, partners, and integrations, further enhancing their utility and functionality. EigenLayer integrates seamlessly with Ethereum, allowing you to restake your assets and participate in decentralized services such as consensus protocols, data availability layers, virtual machines, keeper networks, oracle networks, bridges, threshold cryptography schemes, and trusted execution environments.
Moreover, Babylon Protocol collaborates with leading blockchain infrastructure companies and staking providers such as Jackal Protocol, Portal, MAP Protocol, Solv Protocol, etc., to expand its reach and adoption. Partnerships with trusted entities ensure the reliability and scalability of the protocol, fostering a robust ecosystem for BTC staking and yield generation.
Applications and Use Cases:
The applications of EigenLayer and Babylon Protocol extend beyond traditional staking and yield generation, encompassing a wide range of use cases and industries. EigenLayer facilitates the development of decentralized applications, middleware services, and cross-chain messaging protocols, unlocking new possibilities for innovation and collaboration.
Similarly, Babylon Protocol enables BTC holders like you to access DeFi applications, provide liquidity on decentralized exchanges, and participate in the growing ecosystem of blockchain-based financial services. By bridging the gap between BTC and DeFi, Babylon Protocol opens doors for broader adoption and integration within the crypto space.
“Which assets should I go for?”
EigenLayer and Babylon offer unique approaches to staking, catering to diverse user needs. While EigenLayer focuses on Ethereum-based restaking, providing additional yield opportunities and decentralized security, Babylon specializes in Bitcoin staking, ensuring asset security while enabling passive income. When choosing between the two, consider security, yield potential, flexibility, and community engagement to align with your goals for a secure and rewarding staking experience.
Staking as a Financial Ecosystem with ETH and BTC Restaking
Armed with our knowledge of the mechanics of BTC staking, let’s explore concepts such as points farming, yield and rewards, and security and asset management.
Points Farming:
Points farming involves earning rewards or incentives, often denoted as points, through actions such as staking assets, contributing to network security, or engaging in governance activities. Points farming incentivizes user participation and contributes to the overall growth and sustainability of staking networks.
Yield and Rewards:
Yield is the passive income generated from staking assets, typically in the form of additional tokens or coins. Rewards, on the other hand, involve a broader range of incentives offered to stakers, including transaction fees, network governance rights, and bonus tokens. Together, yield and rewards incentivize stakers to actively participate in securing and maintaining blockchain networks, while also providing tangible financial benefits.
Security and Asset Management
Security involves measures to protect staked assets from potential threats such as hacking, fraud, or network attacks. Asset management involves strategic decisions regarding the allocation and diversification of staked assets to optimize returns and minimize risk. Robust security protocols and effective asset management strategies are needed to ensure the long-term sustainability of staking activities.
Meet Bedrock: Your Staking Partner
Bedrock is The world’s first multi-asset liquid restaking protocol, backed by a non-custodial solution designed in partnership with RockX, a longstanding blockchain infrastructure company with strong roots in crypto staking to provide you with diverse yield opportunities and enhanced security measures while participating in Proof of Stake networks by offering multiple assets for liquid restaking.
uniETH, uniIOTX, uniBTC
We support diverse assets, including uniETH, uniIOTX, and uniBTC. Each asset represents a unique opportunity for you to earn yield and rewards while contributing to the security and decentralization of blockchain networks.
uniBTC: wBTC token holders can enjoy both the rewards of staking BTC tokens and the security of the Ethereum network.
uniETH: is tailored for native restaking and tapping into additional EigenLayer rewards. Bedrock combines institutional-grade security with added yield yield to liquid staking ETH.
uniIOTX: The liquid staking solution on IoTeX blockchain removes several drawbacks with Delegated Proof of Stake on IOTX.
Comparing Your Options
In Conclusion
Bedrock’s multi-asset restaking protocol, particularly the introduction of uniBTC marks a significant evolution in staking. With a 1:1 exchange ratio on Ethereum, you can stake your wBTC into Bedrock’s smart contract, ensuring the safety of your assets through a time-locked Vault-on-chain mechanism. This pioneering approach not only simplifies the process for first-time BTC restakers but also offers lucrative rewards and benefits. With a focus on yield, rewards, security, and decentralization, Bedrock’s uniBTC, along with other assets like uniETH and uniIOTX, provides you with a comprehensive and rewarding staking regime tailored to your needs.
