What is Babylon (BABY)?

Deep Dive

1. Purpose & Value Proposition

Babylon solves Bitcoin’s limited utility as passive collateral by allowing BTC holders to stake directly on the Bitcoin blockchain. This expands Bitcoin’s role from a store of value to a trust layer for PoS chains like Ethereum rollups and Cosmos networks (Babylon Foundation). Stakers retain custody of BTC while earning BABY rewards, creating a decentralized alternative to wrapped Bitcoin (WBTC) or custodial solutions.

2. Technology & Architecture

The protocol uses Bitcoin timelocks and threshold signatures to enforce slashing conditions for misbehaving validators. Babylon Genesis, its flagship Bitcoin-Secured Network (BSN), acts as a control plane to distribute security to other chains. Built on Cosmos SDK, it supports cross-chain interoperability via IBC and integrates with Ethereum Virtual Machine (EVM) for DeFi compatibility (Band Protocol).

3. Tokenomics & Governance

• BABY supply: Capped at 10 billion, with 8% annual inflation split between BTC/BABY stakers.
• Utility: Pays transaction fees, governs protocol upgrades, and incentivizes validators.
• Deflation: A July 2025 proposal introduced BABY burns via auctioning BSN rewards to counter inflation.

Conclusion

Babylon reimagines Bitcoin as a programmable security backbone for Web3, with BABY bridging BTC’s value to decentralized applications. As adoption grows, how will its dual-staking model balance Bitcoin’s scarcity with BABY’s inflationary rewards?