Bitcoin staking protocol closes $18M round led by Polychain and Hack VC
Babylon has raised $18 million to develop a protocol that lets users put up bitcoin to secure proof-of-stake blockchains.
Polychain Capital and Hack VC led the round, which also drew participation from Framework Ventures, Polygon Ventures, and OKX Ventures.
Bitcoin’s continued price run has coincided with growing dry powder deployment in mining companies. But Babylon’s raise points to investor interest in something beyond funding GPUs: finding new use cases for bitcoin.
Babylon originated in a blockchain lab at Stanford. It spun up a novel way to stake bitcoin as an economic security token on blockchains that use proof-of-stake to reach consensus. Proof-of-stake chains typically use their native tokens for staking — ether secures the Ethereum network, for instance — which can compromise security on chains where the native token isn’t sought-after.
Read more: Let’s talk Bitcoin staking: Babylon’s litepaper
Babylon’s staking service joins bitcoin ordinals as an attempt to put bitcoin to use aside from its being a store of value. A vocal segment of bitcoin’s community contest novel use cases for bitcoin, but Babylon founder David Tse believes there is demand for his product among the asset’s holders.
“I think a good number of them do want to participate in a yield-generating opportunity, and those are the ones we are targeting. So for those folks who really believe bitcoin is just gold, then we just have to, you know, leave them with that belief,” Tse said.
Tse said Babylon will hit testnet in January 2024. The protocol would ideally like to go to mainnet by the time of bitcoin’s “halving,” when bitcoin rewards given to miners are cut in half, in April. Tse noted the mainnet deployment depends largely on the outcome of security audits on Babylon’s testnet.
“Several” bitcoin miners participated in the funding round, Tse said, though he declined to disclose Babylon’s valuation.
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