Behind the Calm of Babylon Cap-2 Stake: Who is Continuing to Drive BTC Staking?

The Bitcoin staking protocol Babylon recently completed the second phase (Cap-2) of staking. Although the total staking amount reached nearly 23,000 BTC, the overall atmosphere has significantly calmed compared to the first round (Cap-1) of staking. What exactly is causing this change? Who is still driving the staking of BTC? Let’s delve into these issues and explore the potential impacts of the development of the re-staking ecosystem.

Reasons for the Calm in Cap-2 Stage Stake

Compared to the Cap-1 phase, the transaction fees on the Bitcoin network during the Cap-2 staking period remained at a lower level, with an average high of only 30 satoshis/byte. There are three main reasons for this difference:

1. Stake rule adjustment Cap-2 has removed the stake limit and changed to a "limited time unlimited amount" mechanism, with a staking duration of 10 blocks. The single-stake limit has been increased from 0.05BTC to 500BTC, which greatly meets the needs of institutions and re-staking projects.

2. Stake Points Dilution The points generated per block in Cap-2 have increased to 10,000 points, but due to a significant increase in the total stake, the points earned per BTC have been severely diluted, affecting user participation enthusiasm.

3. Institutions and project parties lead The number of addresses participating in Cap-2 staking is basically on par with Cap-1, and may even have slightly decreased. According to statistics, mainstream re-staking projects account for nearly 90% in Cap-2, and the proportion of native stakers may be less than 10%.

Main Stakeholder Analysis

Statistics show that the overall share of the seven mainstream Babylon re-staking protocols in Cap-2 has increased to about 90%. Among them, Lombard stands out the most, having staked 7166 BTC, accounting for 31.66% of the total in Cap-2. It is worth noting that Lombard did not participate in staking in Cap-1 due to high transaction fees, but has performed strongly in Cap-2.

In addition, the staking rates of platforms such as Solv, Chakra, and pSTAKE have all reached 100%, demonstrating the important position of re-staking protocols within the Babylon ecosystem.

Pros and Cons of Re-staking Agreements

The re-staking agreement serves as an intermediary between users and Babylon, providing convenience and additional benefits for users. Users can enjoy dual point rewards from both the platform and Babylon without having to personally handle the complex staking process.

However, this convenience may bring security risks. Re-staking protocols generally adopt custodial solutions, which contradict the trustless and self-custody concepts emphasized by Babylon. The previous attack on Bedrock, which resulted in a loss of about $2 million, raised concerns among users about the security of re-staking protocols.

Thoughts on Future Development

Babylon aims to unleash the potential of BTC without violating the principle of "Not your keys, not your coins". However, if the security of the staking protocols within the ecosystem is not prioritized and improved, or if the native staking ratio continues to decline, it may affect the long-term development of Babylon.

In the future, the Babylon ecosystem needs to seek a balance between user convenience, profitability, and security, while encouraging more users to participate in native staking to achieve true decentralization and self-custody concepts.