Babylon Phase II stake is heating up, attracting over $1.2 billion in funding.

Recently, the Bitcoin staking protocol Babylon completed the staking activity of its second phase (Cap-2). Although the staking lasted only for 10 blocks, it still attracted nearly 23,000 BTC to participate. Compared to the first round, this staking on-chain activity is noticeably much quieter. So, what are the reasons for this difference? Who is still keen on staking BTC? Let's analyze these questions together.

Why does the Cap-2 stage stake appear calm?

Looking back at the first round of staking in Babylon, users saw the Bitcoin network transaction fees soar to over 1000 satoshis/byte in order to stake BTC into the protocol, with transaction Gas consumption exceeding 4% of the principal. Ultimately, the staking limit of 1000 BTC was reached in just over 3 hours, with approximately 12,700 participating addresses.

In contrast, the staking activities on the chain during the Cap-2 phase were noticeably calm. Although the total amount staked reached 22,891 BTC and there were 12,570 participating addresses, the average network transaction fee during that period only maintained around 30 satoshis/byte. The main reasons for this difference are as follows:

1. Stake rules change

Cap-2 stake adopts a "limited time and unlimited quantity" mechanism, removing the staking cap, with a staking period of 10 blocks (864790-864799). At the same time, the single-stake cap has been raised from 0.05 BTC to 500 BTC. These changes have alleviated users' FOMO emotions to some extent and are more suitable for the needs of institutions and re-staking projects.

2. Staking points are diluted

After Cap-2 is enabled, the points generated per block increase to 10,000. In the case of a significant increase in the total stake amount, the points obtained per unit of stake are severely diluted, which also affects users' enthusiasm for participation.

3. Staking has become dominated by institutions and project parties.

According to statistics, the number of addresses participating in Cap-2 stake has slightly decreased compared to Cap-1. In Cap-2 stake, the proportion of mainstream re-staking projects has approached 90%, while the proportion of native stakers may be less than 10%. This indicates that the main battlefield of Babylon stake now belongs to institutions and re-staking projects.

Who is crazily staking BTC?

Statistics show that the staking share of the seven mainstream Babylon re-staking protocols in Cap-2 has risen to about 90%. Among them, Lombard stands out with a total of 7166 BTC staked, accounting for 31.66% of the total amount in Cap-2. It is worth noting that Lombard did not participate in staking in Cap-1 due to high transaction fees. Currently, its platform staking rate (the ratio of BTC staked in Babylon to BTC deposited by users on the platform) has reached over 88%.

In addition, the staking rates of platforms such as Solv, Chakra, and pSTAKE have all reached 100%.

Does the re-staking agreement deviate from the original intention of Babylon?

Babylon aims to provide a trustless and self-custodial solution that allows users to securely stake BTC and earn rewards. However, the re-staking protocol acts as a "staking intermediary" between users and Babylon, which may somewhat contradict Babylon's original intention.

From the perspective of收益 and convenience, it is understandable that users choose to re-stake. Re-staking not only allows users to enjoy dual points rewards from the platform and Babylon, but also saves time and effort for users.

However, from a security perspective, is it worth sacrificing some security for profit and convenience? Does this contradict the trustless and self-custody concepts promoted by Babylon and BTC?

The restaking protocol commonly adopts a custodial solution, which may pose security risks. For example, the previous incident where Bedrock was attacked, resulting in a loss of approximately $2 million, raised concerns among users about the security of the restaking protocol.

If the security of the re-staking protocols within the ecosystem is not prioritized and improved, or if the native staking ratio continues to decline, then Babylon may face risks contrary to its original intentions. While pursuing profits, both users and project parties should remain vigilant about potential security risks, keeping in mind the principle "Not your keys, not your coins."