Original text | Odaily Planet Daily
Author｜Golem
On October 9, the first phase of Cap-2 staking of the Bitcoin staking protocol Babylon ended. Although the staking only lasted for 10 blocks, there were still nearly 23,000 BTC participating in the pledge. However, judging from the popularity of community discussions and on-chain handling fees, the staking phase of Babylon Cap-2 is obviously much calmer. What is the reason for the difference? Who is still staking BTC like crazy?
Odaily Planet Daily will analyze the above issues in this article and count the staking situation of the mainstream Babylon re-staking protocol in Cap-2. Finally, it will briefly discuss whether the security of user funds and the development of the Babylon ecosystem also exist while the re-staking ecosystem is growing. Hidden danger?
Why is Cap-2 staking so quiet?
Looking back at the Babylon Cap-1 stage of staking, in order for users to pledge BTC into Babylon, the Bitcoin network transaction fee was pushed up to more than 1,000 satoshis/byte, and the transaction gas loss exceeded 4% of the principal, which ended up taking more than 3 hours. The pledge limit of 1,000 BTC has been reached, and there are approximately 12,700 participating addresses.
On the other hand, the staking chain in the Cap-2 stage was much calmer. Although the total pledged amount was 22,891 BTC and the number of participating addresses was 12,570, the average online transaction fee during the period was only maintained at 30 Satoshi/byte. There are three main reasons for this difference:
Changes to staking rules
The Cap-1 staking rules not only have a hard cap on staking, but the upper limit for each pledge transaction is only 0.05 BTC and the lower limit is 0.005 BTC. In comparison, Cap-2 pledge has removed the pledge limit and changed it to a "limited time and unlimited" pledge mechanism. The pledge period is 10 blocks (864790-864799). At the same time, the single pledge limit has been increased from 0.05 BTC to 0.05 BTC. 500BTC.
The time-limited and unlimited-quantity mechanism can alleviate users' FOMO emotions to a certain extent, and pledge according to time progress. The change in the single pledge limit may have little impact on independent staking retail investors, but it will have a greater impact on some re-pledge protocols and institutions. Because their pledge volumes tend to be large, the low single pledge limit will force them to trade more frequently, making it easier to cause on-chain congestion. The Cap-2 phase’s single pledge limit of 500 BTC is suitable for the needs of institutions and re-pledge projects. .
Therefore, the change in staking rules is the main reason for the "calm" on the Babylon Cap-2 staking chain.
Staking points are diluted
In Cap-1, because there is a pledge upper limit of 1,000 BTC, the 3,125 points generated in each block are distributed according to the pledge ratio. For example, if an address pledges 0.05 BTC, then every time a Bitcoin block passes, You can earn 3125* 0.05/1000 = 0.15625 points. The "head mine" welfare is also the biggest reason why Cap-1 can cause FOMO.
While the points allocation mechanism remains unchanged, the points generated in each block after Cap-2 is turned on increase to 10,000 points. At this time, if an address still pledges 0.05 BTC, each Bitcoin block will now You can earn 10000* 0.05/23891 = 0.0209 points.
It can be seen that after Cap-2 staking is enabled, the staking points are seriously diluted, which will also affect the enthusiasm of users to participate to some extent.
Pledge is already the domain of institutions and project parties
According to statistics, the number of addresses participating in Cap-1 staking is 12,700, while the number of addresses participating in Cap-2 staking is 12,570. Not only has there been no significant increase, but there has even been a slight decrease in the number of addresses.
In the Cap-1 pledge, according to official disclosures, about 80% of the pledge amount of 1,000 BTC comes from the Liquid Staking Token (LST) project, and about 20% comes from native pledgers. In Cap-2 staking, the proportion of re-pledge projects has further increased. According to statistics from Odaily Planet Daily, the proportion of mainstream re-pledge projects is close to 90%, and the proportion of native pledgers may already be less than 10%.
The main battleground for Babylon staking undoubtedly belongs to institutions and re-pledge projects, and they conduct professional pledges through custodians and some transaction final confirmation service providers. For users who have already deposited BTC into the re-pledge platform, You don’t need to directly participate or even pay attention to the whole process, you just need to collect the rewards at a specific time. Therefore, Cap-2 staking seems "calm", partly because the Babylon re-staking ecosystem continues to develop and grow, providing convenience to users.
Who is staking the craziest BTC?
Odaily Planet Daily calculated the staking status of the current seven mainstream Babylon re-pledge protocols in Cap-1 and Cap-2.
According to the data in the table above, overall, these seven re-pledge agreements account for more than 80% of the total pledge share in Cap-1, while the share in Cap-2 pledge has increased to about 90%.
Among them, Lombard has pledged the most BTC in Cap-2, with a total of 7,166 BTC pledged, accounting for 31.66% in Cao-2. Previously, Lombard did not choose to pledge BTC in Cap-1 due to excessive handling fees. Enter Babylon. As of now, the number of BTC deposited by users on its platform is 8081.8, and the platform pledge rate (the ratio between the BTC pledged into Babylon and the BTC deposited by users on the platform) has reached more than 88%.
In addition, protocols with a 100% pledge rate on the platform include Solv, Chakra, and pSTAKE.
Does the re-pledge agreement violate Babylon’s original intention?
Babylon has developed a trustless and self-custodial solution that allows users to securely stake their BTC and earn rewards while providing security to POS systems.
The Babylon ecological re-pledge agreement acts as a "pledge intermediary" between users and Babylon. Users first deposit BTC into the pledge platform, and then when Babylon pledge is enabled, business and technical expertise are used to help users pledge BTC into the platform. BTC, in terms of rewards, users can enjoy double point rewards from the platform and Babylon.
From the perspective of income and convenience, it is understandable for users to re-pledge. On the one hand, re-staking can not only enjoy the rewards of the re-staking platform and Babylon, but also unilaterally enjoy the platform's staking rewards even if there is no BTC pledged into Babylon; on the other hand, due to the complexity of Babylon's staking rules and time, the re-staking agreement It can save users energy and time very well.
But from a security perspective, is it worth sacrificing some security for benefits and convenience? Or even contrary to the trustless and BTC self-custody narrative promoted by Babylon?
The Babylon re-pledge protocol currently uses a custody solution. Previously, Bedrock suffered a loss of approximately US$2 million on DEX due to an attack. Although the official subsequently repaired it and compensated users, this incident also caused users to have doubts about the re-pledge protocol. Are you worried about security? Will other black swan events occur in the future? When the user's pledge principal is threatened by security, the points reward obtained from the pledge will be as worthless as "Happy Beans".
"Not your keys, not your coins", Babylon is trying to release the potential of BTC without breaking this principle. However, if the security of the re-pledge protocol in the ecosystem is not paid attention to and upgraded, or the native staking ratio is still low, then the problem may arise again. Will return to the starting point.
(The above content is excerpted and reprinted with the authorization of our partner PANews, original text link | Source: Odaily Planet Daily)
Statement: The article only represents the author's personal views and opinions, and does not represent the objective views and positions of the blockchain. All contents and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and transactions, and the author and Blockchain Client will not be held responsible for any direct or indirect losses caused by investors' transactions.
"Babylon Cap-2 has attracted more than 1.2 billion US dollars, who is still staking Bitcoin like crazy?" This article was first published on (Block Guest).
