Written by: DeFiMaximalist, CryptoDongle
Babylon Phase-1 Cap-2 ended at 3:08 a.m. on October 9, 2019 (block height 864799). A total of 22,891 BTC were deposited into Babylon, with more than 12,000 Stakers participating. Gas rose sharply from 60 satoshis to a maximum of 5,281 satoshis, consuming a total of 1.56 BTC. The results of the players in each BTC Restaking track are as follows:
（source: https://btcstaking.babylonlabs.io/ ,https://x.com/babylonlabs_io/status/1843795315721416722 ,
https://mempool.space/zh/block/000000000000000000001e14e2e02b7ecd370f30e9e6d32042b569dc8cf0f597 )
At this moment when we should be celebrating, I urge everyone to calm down and think about whether we should still only consider “TVL” under the “points game” rules of Restaking?
1. Beware of TVL’s “too big to fail”
Less than 10 days ago, the creator of Restaking promoted the points game to the "household name" EigenLayer, and its token $EIGEN opened the transfer function after being locked for 5 months. The highest price was $4.5, the current price was $3.78, the circulating market value was about 700 million US dollars, and the FDM was about 6.35 billion US dollars. Compared with EigenLayer's peak TVL of over 20 billion US dollars, the current TVL is $11,726,166,528.30 (11 billion US dollars). The gap between EigenLayer's huge TVL and the current market value of $EIGEN made Restaker, who was full of ambition at the time, sigh: "As one drinks the water, one knows whether it is hot or cold."
（source: https://coinmarketcap.com/currencies/eigenlayer/ , https://defillama.com/protocol/eigenlaye#information）
2. Too large TVL will only lead to diluted profits
EigenLayer has done a lot of work to protect small and medium-sized restakers: protection of low-income accounts, a 5-month lock-up period after the issuance of the coin, and additional airdrops before circulation. But now it seems that it can only prevent large-scale stampedes. Especially the 5-month lock-up period, which was intended to use time to exchange development space for AVS, but with little effect. However, even when AVS has a significant improvement, EigenLayer's excessive TVL has exceeded AVS's needs. Among the 17 AVSs launched, 15 of them have a Delegated ETH TVL of more than 1.5 billion US dollars. How many AVSs can support the security of 1.5 billion US dollars? Or this is the fundamental restriction on the development of AVS: EigenLayer's excessive TVL makes AVS's income negligible! EigenDA's Weekly Rewards are only 2.5 ETH, while the market value of Delegated ETH and EIGEN exceeds 9 billion US dollars!
(source：https://app.eigenlayer.xyz/avs/0x870679e138bcdf293b7ff14dd44b70fc97e12fc0）
3. With the popularity of point games, the Restaking track needs new indicators
I will not discuss how to increase EigenLayer's revenue. After all, "what belongs to Caesar should be given to Caesar", and the same is true for "Caesars". For us Restakers, we are more concerned about real revenue - after all, no one wants to get up early and stay up late to grab the first mine, and finally work for the miners. Let's go back to the Good Old Days: DeFi Summer era, in addition to TVL, we also have APR! As the most intuitive indicator of revenue, APR once made people crazy: if there is a 100% profit, capital dares to risk hanging; if there is a 300% profit, capital dares to trample on all the laws of the world - from Das Kapital. But in the era of points, EigenLayer's points cannot be directly compared with Babylon's points, because the so-called points are because they have not yet circulated and have no price. But in the same ecosystem, how many points can assets of the same value get can be calculated! So we are looking for the "APR" indicator in the era of points, PPC - Points per Coin!
4. PPC - Points per Coin Calculation
Take Babylon as an example. It has opened two caps, Cap1 1000 BTC, Cap2 22891 BTC. The rules for generating Babylon Points are different for the two caps. Each block in Cap1 generates 3125 points, and each block in Cap2 generates 10000 points. Assuming that the block length from Cap2 to Cap3 is the same as that from Cap1 to Cap2, it can be calculated that Cap1 can get an average of 21500 Babylon Points per BTC, and Cap2 can get an average of 2879.75 Babylon Points per BTC. The difference is more than 7 times! It can be seen that Cap1 is very cost-effective!
5. Comparison of participants in the Restaking track under the Babylon ecosystem
Now let's calculate the PPC of each major competitor (Babylon official website Cap2 after the TOP5 Finality Providers) is what is the PPC:
PS: The data of Staked BTC is selected from the highest value among Babylon official website, project social media and project official website.
It can be seen that
The ranking by TVL is: Lombard, Solv, Bedrock, PumpBTC, Lorenzo;
The rankings by PPC are: Bedrock, Lorenzo, PumpBTC, Solv, and Lombard.
It can be seen that if TVL and yield are considered together, Bedrock scores the highest.
6. Whether for Babylon or the BTC ecosystem, everything is just beginning
In fact, the 22,000+ BTC last night may seem like a lot, but when converted into USD, it is about 1.5 billion USD, which is about 14% of EigenLayer’s TVL. It may be a bit unfair to compare Babylon with EigenLayer, but the Crypto market needs Babylon more urgently than EigenLayer:
1. From the Holder's perspective, BTC Holders need a decentralized platform that generates staking profits more than ETH Holders;
2. From the perspective of Layer2, BTC L2 needs Validators As A Service more than ETH L2. Unlike AVS, there are already multiple BTC L2s with higher TVL than Babylon. Of course, on the other hand, it can also be said that Babylon is more controlled in the growth of TVL.
3. From the perspective of infrastructure, BTC's demand for Babylon is much stronger than ETH's demand for EigenLayer. In the Ethereum ecosystem, there are already too many infrastructures to provide tools for developers. In contrast, in the BTC ecosystem, an Ordinals can cause such a big market response. Imagine that when Babylon is developed and perfected, the BTC ecosystem will undergo earth-shaking changes.
Don’t forget that BTC’s market capitalization is more than just half of the entire Crypto world. Everything is just beginning.
