Original author: Helen Partz
Original title: Arrington Capital-backed RedStone launches Bitcoin staking oracles
Original source: Cointelegraph
Compiled by: Koala, Mars Finance
RedStone co-founder Marcin Kaźmierczak said that without Bitcoin staking oracles, BTC-based liquid staking tokens can only be used to provide liquidity for DEXs.
RedStone Oracles, a major smart contract oracle data provider, has launched a staking oracle designed specifically for Bitcoin staking.
With the new implementation, users can stake their Bitcoin in exchange for Bitcoin-based Liquid Staked Tokens (LST) on the Ethereum blockchain, such as Lombard Staked BTC (LBTC).
This marks the first time BTC LST can be used for lending and other purposes in decentralized finance (DeFi), RedStone co-founder and COO Marcin Kaźmierczak told Cointelegraph on Oct. 8.
What are staking oracles and why are they needed?
Blockchain oracles are services that act as a bridge between real-world data and events and the blockchain. Their purpose is to verify off-chain data in the real world on the blockchain.
Oracles are widely used in many DeFi protocols, including lending (allowing users to borrow against their cryptocurrency holdings) and staking (enabling them to earn rewards by locking crypto assets in smart contracts).
Blockchains cannot connect to real-world data and events on their own. Source: Chainlink
Staking is an emerging and increasingly popular cryptoeconomic model that runs throughout the smart contract ecosystem and is directly related to oracle networks.
Staking oracles collect and validate critical inputs such as staking rewards, slashing events, and other data required for LSTs such as Lido Staked Ether (stETH) to function properly.
Without an oracle, Bitcoin LST can only be used to provide liquidity for DEX
Kaźmierczak told Cointelegraph that with RedStone’s new Bitcoin staking oracle, users can use Bitcoin LST (including LBTC) in a similar way to how they use Lido’s wstETH.
For example, users can implement LBTC in DeFi lending on platforms such as Morpho and Compound. They can also use oracles and LBTC on the Gearbox Protocol to generate composable leverage.
RedStone's chief of staff Tomasz Płatek (left) is flanked by co-founder and COO Marcin Kaźmierczak. Source: LinkedIn
“As a Bitcoin holder, you can stake your Bitcoin through Babylon and receive LBTC, the LST token on the Ethereum mainnet, through Lombard,” Kaźmierczak said. “Without oracles, LBTC can only be used to provide liquidity to decentralized exchanges, which do not require oracles,” he added.
He said the introduction of a Bitcoin staking oracle could spark “immediate changes” in the DeFi ecosystem around Bitcoin LST, similar to the one created around Ethereum LST.
“Because of the nature of Bitcoin which can grow with market excitement, even a small gain in huge underlying value is a big deal,” Kaźmierczak said.
A few months ago, RedStone Oracles raised $15 million in a Series A funding round led by major crypto investment firm Arrington Capital.
