How to stake BTC with Babylon

Overview

What is Babylon?

Babylon allows Bitcoin holders to stake their BTC for PoS blockchains without relying on third-party custody, bridges, or wrapping. Traditionally, Bitcoin has been seen as a store of value, but Babylon expands its utility by enabling Bitcoin to play an active role in securing various PoS ecosystems.

This is achieved through a trust-minimized protocol that connects Bitcoin holders with the demand for network security across multiple blockchain systems, including PoS chains.

• If you're interested, you can read our comprehensive overview of Babylon here.

• To dive right into the staking guide, head to: How to stake BTC with Babylon or check our the latest about Babylon's Phase 3 here.

Babylon Timeline & Planned Phases

As the network is participating in a phased rollout, the full scope and functionality of Babylon is not yet live. Babylon’s mainnet launch is divided into three distinct phases, each with specific goals and functionalities:

So far, there have been three openings for users to stake their BTC in a non-custodial manner to participate in the network.

As the network continues to develop it is recommended to follow Chorus One on Twitter/X, Babylon Foundation on Twitter/X, as well as the Chorus One Blog for new updates.

• Future updates to the network will see the PoS network BabylonChain go live in the near future with further expansion and utility planned from there.

Babylon Cap 3 Information

Babylon BTC staking for Cap 3 went live on December 10, 2024 at BTC block 874,088 (around 11:00 UTC). With this new cap, Bitcoin holders can now stake their BTC seamlessly and earn rewards while contributing to the evolution of the Bitcoin ecosystem.

Cap 3 introduces new limits and features that make this staking opportunity both exciting and accessible:

• 🌟 Start Block: 874,088

• ⏳ Duration: 1,000 BTC blocks (~1 week)

• 🔒 Minimum Stake Per Transaction: 0.005 BTC

• 🔓 Maximum Stake Per Transaction: 5,000 BTC

• 🏆 Rewards:

  • First 300 BTC blocks: 100,000 points per block

  • Remaining 700 BTC blocks: 21,000 points per block

Babylon vs BabylonChain

Babylon is a Bitcoin Staking Protocol that provides shared security for PoS systems and allows Bitcoin holders to delegate their BTC to Finality Providers, (similar to Validators in other contexts) who can then provide Bitcoin security to a consumer PoS chain or DA (Data Availability) layer.

BabylonChain, on the other hand, is built on the Cosmos SDK which receives security from the Babylon Bitcoin Staking Protocol and acts as the first chain that Finality Providers can support.

However, Babylon plans to support different PoS systems from various blockchain ecosystems and provide them access to shared security collateral via staked BTC.

Mechanisms of Babylon

Overview

Timestamping

Staking Process

Security Guarantees

The Babylon protocol operates as a modular plug-in compatible with various PoS consensus protocols, serving as a foundational component for building restaking protocols. The core component, the 'control plane' (Babylon Chain), manages several critical functions:

• Timestamping Service: Ensures synchronization with the Bitcoin network.

• Stake Matching: Matches Bitcoin stakes with PoS chains and tracks staking/validation information.

• Finality Signature Recording: Records the finality signatures of PoS chains.

Timestamping involves embedding data at a specific point in time. Babylon records PoS chain data onto Bitcoin to leverage Bitcoin’s robust PoW security. Due to Bitcoin’s expensive and limited blockspace, direct timestamping of every PoS chain onto Bitcoin is impractical.

Instead, the 'control plane,' implemented as a Cosmos-SDK chain (aka Babylon Chain), aggregates timestamps from all PoS chains via IBC. This ensures a secure and immutable record of PoS data on the Bitcoin blockchain.

To stake, a Bitcoin staker (e.g., Alice) sends a special transaction to the Bitcoin blockchain, locking her BTC in a self-custodial vault. This vault, defined by Bitcoin's scripting language, has three transaction types:

• Unbonding Transaction: Allows Alice to retrieve her Bitcoin after a predefined period once she initiates the unbonding process.

• Slashing Transaction: Sends the Bitcoin to a burn address if Alice violates the PoS protocol.

• Withdraw Transaction: Allows withdrawal after the staking period is complete, provided no violations have occurred.

Alice delegates her staking duties to a finality provider on the Babylon chain, who uses their private keys to validate the PoS chain on her behalf. This delegation maintains Alice's control over her Bitcoin while enabling participation in PoS validation.

Babylon ensures validators are accountable for their actions through cryptographic mechanisms like Extractable One-Time Signatures (EOTS). EOTS allows the network to detect and prove double-signing, exposing the validator's private key. This key, which is already pre-signed by the staker and the finality provider, is used to create a slashing transaction, burning the staked Bitcoin as a penalty. Babylon's protocol guarantees that a block is truly final only when it has received EOTS from at least 2/3 of the staked BTC.

A simplified transaction flow on Babylon would roughly look like this:

How to stake BTC with Babylon

This guide will show you how to stake your Bitcoin (BTC) to Babylon via Chorus One’s Finality Provider using Babylon Lab's Staking Interface or you can use the Chorus One BTC Staking Dashboard.

Bitcoin (BTC) staking on Babylon was first activated at BTC block height 857909.

1.) Set up your Supported Bitcoin Wallet

Currently the Babylon Foundation recommends using the OKX wallet, although other wallets are possible. The OKX browser extension can be found here.

A few important warnings:

Begin by installing the OKX wallet browser extension, setting up a seed phrase (which should be stored securely) and then deposit your BTC before proceeding to the next step.

2.) Connect your Wallet

Navigate to Babylon's staking interface via Chorus One or use the Chorus One BTC Staking Dashboard via Staking Rewards.

Connect your wallet by clicking on the orange button in the bottom-right of the screen.

Next you will be prompted to review and accept the terms then choose the OKX wallet to connect.

3.) Begin staking your BTC

Next you will see your wallet connected to the interface. This will give you a readout of your previous staking history, TVL, time left in the staking window (if applicable) and other finality providers to choose from.

You will also see a section titled 'Step 2: Set up staking terms'

• This will be where you can choose how much BTC with wish to stake

• There may be a minimum amount required to stake.

Next, you will want to enter how much BTC you wish to stake and which finality provider to use.

Shown below, you can use the search bar to look for Chorus One.

Simply click on it to select it as your finality provider, then enter the amount of BTC you wish to stake.

To begin your stake, click on 'Preview' which will prompt you to review and sign the transaction.

Once you've clicked on 'Preview' to begin submitting the transaction, you will be given a chance to review and approve the transaction.

• The maximum staking time is 65 weeks, after which your BTC will be unstaked.

• Once you stake is accepted, you can remove it at any time by initiating a 7 day unbonding period.

After clicking 'Stake' you will be prompted to approve and sign the transaction in your OKX wallet.

4.) Reviewing your staking transaction

Once you've submitted your transaction, you will see the Babylon dashboard again.

Under the section titled 'Staking history' you will see your pending stake.

Below we can see the staking history in depth.

After 10 BTC block confirmation have been reached, your stake will change to active, and you will also see the 'Unbond' button become available.

This can be used to unstake your BTC and initiate to 7 day unbonding period.

5.) Reviewing your staked balances

You can review your staked balances from the Babylon dashboard after connecting your OKX wallet.

Alternatively you can use the Staking Rewards Dashboard to review your active BTC staking. (shown below)

Below you can see and example of the Babylon Labs dashboard which shows:

1. Total network metrics along the top row of the dashboard.

2. Your staking summary along the second row of the dashboard.

3. Staking finality providers in the middle.

4. Your staking history towards the bottom of the dashboard.

6.) Unstaking your BTC from Babylon

To unstake your BTC from Babylon, simply navigate to your staking history and click on 'Unbond'.

You will then be prompted with a message about the details on the unbonding transaction.

If you wish to unstake, click on 'Proceed' and your OKX wallet will prompt you with a transaction to sign, illustrated below.

To begin your unstaking, approve the transaction. Your BTC will begin the 7 day unbonding process, after which you will be able to withdraw your BTC from the Babylon Labs interface or the Staking Rewards Dashboard.

A Note to Institutional Investors:

If you are an institutional investor looking to stake BTC through Babylon with Chorus One, please reach out to us via our staking request form or at [email protected]