The second phase of Babylon staking is complete, attracting over $1.2 billion in funds.

The Bitcoin staking protocol Babylon recently completed the second phase of the staking activity (Cap-2). Although the staking period lasted only 10 blocks, it still attracted nearly 23,000 BTC participation. However, compared to the first phase, the community discussion intensity and on-chain activity of this staking event have significantly decreased. What exactly is the reason for this difference? Who continues to actively participate in BTC staking? Let's delve into these questions.

Why is the Cap-2 Stage Stake So Calm?

In reviewing the first phase of Babylon (Cap-1) stake, users raised the Bitcoin network transaction fees to over 1000 satoshi/byte in order to participate in the staking, with transaction gas consumption even exceeding 4% of the principal. Ultimately, the staking cap of 1000 BTC was reached in just over 3 hours, with approximately 12,700 participating addresses.

In contrast, the on-chain activity during the Cap-2 phase was significantly quieter. Although the total stake reached 22,891 BTC with 12,570 participating addresses, the average network transaction fee during this period only maintained around 30 satoshis/byte at its highest. The reasons for this difference are mainly as follows:

1. Adjustment of stake rules

Cap-1 stake has a total amount limit, and each staking transaction is restricted to between 0.005-0.05 BTC. In contrast, Cap-2 adopts a "limited time unlimited quantity" mechanism, with a staking period of 10 blocks (864790-864799), while raising the single stake limit to 500 BTC. This change alleviates users' panic buying mentality to some extent and is more suitable for the needs of large institutions and re-staking projects.

2. Stake points are diluted.

In Cap-1, due to the staking limit of 1000 BTC, the 3125 points generated per block are distributed relatively concentrated according to the staking ratio. In Cap-2, the points generated per block increase to 10000, but the total staking amount increases significantly, resulting in the points earned per unit of stake being severely diluted. This somewhat affects users' enthusiasm for participation.

3. The main force of staking shifts towards institutions and project parties.

Data shows that the number of addresses participating in Cap-2 staking is basically on par with Cap-1, and may even have slightly decreased. However, it is worth noting that the proportion of re-staking projects in the total staking volume has further increased, approaching 90%. This indicates that the main battlefield for Babylon staking has shifted towards institutions and re-staking projects, with ordinary users' direct participation decreasing.

Performance of Mainstream Re-staking Protocols

In Cap-2 staking, the main re-staking protocols account for about 90% of the market share, an increase from 80% in Cap-1. The most outstanding performer is Lombard, which has staked a total of 7166 BTC, accounting for 31.66% of the total in Cap-2. It is worth mentioning that Lombard did not participate in Cap-1 staking due to issues with 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 platform staking rates of protocols such as Solv, Chakra, and pSTAKE have even reached 100%.

Has the development of the re-staking protocol deviated from the original intention of Babylon?

The original design concept of Babylon was to provide a trustless and self-custody solution, allowing users to securely stake BTC and earn rewards. However, the rise of re-staking protocols seems to contradict this concept.

From the perspective of收益 and convenience, it is understandable that users choose to restake. It not only offers dual rewards (platform rewards and Babylon rewards) but also simplifies the complex staking process. However, from a security standpoint, does this practice contradict the trustless and BTC self-custody principles advocated by Babylon?

The re-staking protocol currently commonly adopts a custody solution, which inevitably brings additional security risks. The previous incident where Bedrock suffered an attack resulting in a loss of about $2 million has raised users' concerns about the security of the re-staking protocol.

If the security of the re-staking protocol within the ecosystem is not prioritized and improved, or if the native staking ratio continues to decline, Babylon may face risks that contradict its original intention. Finding a balance between convenience, profitability, and security will be a key issue that Babylon and its ecosystem need to address for future development.