Recently, Babylon, which is supported by BN, has also completed the staking task of the WEB3 wallet and will open the second phase of Cap-2 deposits in advance at 4:00 on October 9, which also means that it will be launched soon. As the venture capital department of Binance, the main cryptocurrency asset, Binance Lab announced its investment in the Bitcoin (BTC) staking protocol "Babylon". Why is it so popular?

Lian He, co-founder of Binance and head of Binance Labs, commented: "Bitcoin staking brings a crucial new use case to the industry and marks an important step in the convergence of Bitcoin and the proof-of-stake economy. Binance Labs' investment in Babylon represents our commitment to supporting innovative projects that are leading the Bitcoin narrative and advancing its use cases."

As a Bitcoin ecosystem liquidity pledge project with such a luxurious investment lineup in the first half of the year, can Babylon take over as the leader of the Bitcoin ecosystem and lead the trillion-dollar potential BTCFi market?

Project Introduction

Babylon is a layer1 blockchain founded by Professor David Tse of Stanford University. The project's mission is to bring Bitcoin's unparalleled security to all PoS blockchains without any additional energy costs. The team consists of researchers and experienced developers from Stanford University and experienced business consultants.

Babylon  VS  Eigenlayer

The Babylon protocol is a connector that connects the BTC mainnet and other POS chains. Its goal is to match the lack of Yied for native assets on the BTC POW chain and the lack of decentralized BTC custody services on other POS chains, so that BTC assets can be connected to other POS chains in a native way and generate expected returns. Therefore, Babylon mainly serves assets with the BTC universe consensus, providing a technical framework and possibility for them to generate returns.

Eigenlayer packages the verification service capabilities of Ethereum Validators into commodities. On the one hand, Ethereum layer2 or other modular POS chains can access the super-strong verification capabilities of Ethereum Validators, and on the other hand, the Yield generated by these POS chains can amplify and enhance the original Ethereum nodes. Therefore, Eigenlayer's goal is to commercialize the physical verification service capabilities of Ethereum Validators to amplify the profitability of native Ethereum.

2) Babylon's "Security as a Service" and Eigenlayer's "AVS as a Service" are the same in terms of business logic, but the subtle difference is that Babylon's requirements are more rigid. If other POS chains do not connect to Babylon, they will be criticized for being "centralized" in terms of hosting methods.

Project narrative background: Three chains in one, building a better future together

For EVM-based chains, it is not impossible to introduce assets such as BTC whose "quality" exceeds that of ETH.

1- COSMOS Chain: Babylon is rooted in Cosmos, and the concept of "security sharing" also comes from Cosmos, using Cosmos's IBC inter-chain communication. For the Cosmos chain, it is inevitable to embrace the security brought by Babylon, and it will also bring new vitality to the Cosmos system.

2- BTC chain: Babylon’s positioning target is the BTC chain. As mentioned above, Babylon can gradually activate the use of BTC in the BTC network. When holders gradually adapt to this way of making money, it will become a habit and they will be more closely integrated with Babylon.

3- ETH chain: Babylon’s concept is in the same vein as Eigenlayer, but due to the difference in the BTC network, Babylon has achieved self-custody, surpassing Eigenlayer in this regard. If you regard ETH as a test chain for BTC, then Eigenlayer can even be considered an experimental product of Babylon in some dimensions (this is just my opinion, please pay attention to the premise). Moreover, for EVM-based chains, it is not impossible to introduce assets such as BTC, which are superior to ETH in terms of "quality".

Project prospects

Babylon is also extending Bitcoin’s security to Bitcoin’s Data Availability Layer and Bitcoin’s Layer2.

Bitcoin DA Protocol: Babylon is developing a Bitcoin DA protocol that utilizes Bitcoin's limited block space to perform critical tasks, such as providing a censorship-resistant layer for proof-of-stake chains. As the world's most secure and uncensorable storage space, Bitcoin's block space has become a valuable resource for protecting the decentralized world from censorship.

Babylon Layer2: Babylon can be used as an intermediate layer between bitcoin rollup and bitcoin, and as an intermediate layer for temporary store data before bitcoin inscription. This layer2 can greatly empower the entire ecosystem:

- Layer2 security through Babylon

- Greatly reduce gas fees on the second layer

- Layer2 can generate a large number of Bitcoin applications

- Carry the overflow user traffic of Bitcoin layer 1, and increase the huge user base of Bitcoin ecosystem.

In summary, as a leading project in the Bitcoin ecosystem, Babylon will expand an ecological world centered on Bitcoin, unlock the staking value of Bitcoin with a market value of $700 billion, turn Bitcoin into a more extensive interest-bearing asset, and provide income for Bitcoin holders. At the same time, Babylon greatly enhances the ecological value of Bitcoin, vertically expands the second-layer and middle-layer applications of Bitcoin, horizontally expands the income value of Bitcoin in various POS chains, and cultivates a safer and larger POS economy.

Project Team

Babylon's team consists of 32 technicians and consultants. The team has strong technical capabilities and often participates in various Web3 and project marketing activities, which shows that the team is highly motivated. The backgrounds of several core members are as follows.
Mingchao (Fisher) Yu is the founder and CTO of Babylon. From 2015 to 2017, he was a lecturer at the Australian National University and a senior system engineer at InterfereX Communications. From 2017 to 2018, he was a postdoctoral researcher at the University of Southern California. From 2018 to 2022, he was a senior research engineer and principal engineer at Dolby Laboratories.

David Tse is the co-founder of BabylonChain. David Tse graduated from MIT and later became a professor at the School of Engineering at Stanford University and the University of Chicago. He is a member of the National Academy of Engineering. His research interests are information theory, computational genomics, machine learning, and blockchain.

Project Valuation Analysis

When talking about prospects, we have to mention the valuation of the project; when calculating the valuation, we have to find a comparison. Here are a few simple hypothetical comparisons (not rigorous):

1) TVL

Currently, Eigenlayer's TVL is 14.7 billion US dollars, and ETH's market value is about 350 billion US dollars, accounting for 4.2%; the current BTC market value is about 1.3 trillion US dollars. If the proportion is the same, Babylon's possible TVL in the future can reach 50 billion US dollars (what is the concept of 50 billion US dollars? According to the current situation, TVL will surpass USDC's market value and be second only to SOL). Even if the proportion is not that high, we only count half of it, which is more than 20 billion US dollars of TVL, and it should be noted that the assets locked here are all the best quality assets.

2) FDV

Let's compare it with Eigenlayer. Eigenlayer received $100 million in funding from a16z in its B round on February 22, 2024. I will tentatively measure this project based on $5-10 billion. I think Babylon's future FDV will not be lower than Eigenlayer.

If we use TVL to compare, Arb's TVL is 15 billion, and its FDV is about 10 billion. According to the previous analysis, Babylon's future TVL is likely to be no lower than Arb, so its valuation will not be lower than Arb in theory, that is, 10 billion US dollars. Of course, you may say that Arb is a public chain, and Babylon is actually a chain, and Arb seeks development and profit internally, while Babylon seeks development and profit externally. The business logic is different, but the expectations seem to be better. Therefore, Babylon's FDV will be at least 10 billion US dollars in the future.

Project financing and lineup

Babylon raised a total of US$90 million

2022-01-01 Babylon completes $8 million seed round of financing, led by IDG Capital and Breyer Capital

On December 7, 2023, it completed a US$18 million Series A financing, led by Polychain Capital and Hack VC. Framework Ventures, Polygon Ventures, IOSG Ventures, Castle Island Ventures, OKX Ventures, Finality Capital, Breyer Capital and Symbolic Capital also participated in the investment.

On February 27, 2024, Binance Labs, the world's leading blockchain investment institution, announced an investment in the Babylon project. Although the specific amount was not disclosed, this move undoubtedly brought more industry resources and exposure opportunities to the project.

On May 30, 2024, the Babylon project reached a historic financing milestone, successfully raising $70 million. This round of financing was led by Paradigm* and Polychain again, and many well-known investment institutions such as Bullish, HashKey Capital, and IOSG Ventures also actively followed up.

Project popularity

Twitter followers: 493,000

DIS fans: 48.3W

Listing: Binance and other mainstream exchanges

Estimated total amount: 1 billion

Current stage: Bitcoin staking mainnet phase 1. Mainnet phase 2 will be launched in the second week of October

Project Summary

One of the main narratives of this round of bull market is the Bitcoin ecosystem. The Renaissance of the Bitcoin ecosystem originated from the inscription craze after the emergence of the Ordinals protocol. People found that assets could be issued on the Bitcoin chain. With more assets, there was a demand for asset trading and applications, which led to the emergence of a series of projects such as the Bitcoin second-layer network and various derivative financial instruments.

In summary, the problems that the Babylon protocol can solve include: low yield of Bitcoin financial management; few application scenarios of Bitcoin; and non-scalability of Bitcoin system security. The Babylon protocol is in the Bitcoin ecosystem, Bitcoin programmability, Bitcoin Layer 2, Bitcoin pledge, and is also in the track of re-pledge, shared security, modularization, Cosmos ecology, etc. It conforms to the mainstream narrative and has a strong narrative. It is highly likely to become the next 10 billion market value benchmark for the BTC pledge sector leader