A Bitcoin fee bidding war erupted on Aug. 22 as Babylon debuted phase one of its native BTC staking offering.
Early on Thursday, Aug. 22, the average Bitcoin (BTC) transaction fee was under $1. Closer to noon, users had to pay around $132-$137 to transfer BTC after Babylon’s Bitcoin staking program went live.
Babylon’s BTC staking allows users to earn yield by depositing crypto directly on proof-of-stake (PoS) networks. The idea aims to expand BTC utility beyond the “digital gold” narrative, which typically incentivizes holding the asset rather than using it in more active financial strategies.
Phase one of Babylon’s staking system was a “locking-only phase,” where users quickly filled the maximum allocation within hours.
In BTC’s case, as a proof-of-work (PoW) blockchain, miners validate transactions in exchange for fees. Higher fees can encourage miners to prioritize certain transactions.
The rush to participate in Babylon’s staking platform triggered an on-chain scramble among users, driving competition for miner priority and propelling BTC fees near $140, as confirmed by CryptoQuant analyst J.A. Maartun.
Over 1,000 BTC, worth nearly $61 million, was prepared for phase two after the race to stake assets. More than 12,700 stakers and 20,610 solo delegates queued up to earn rewards by securing PoS chains with BTC.
Live chart 👇https://t.co/6uifYvuvvP
— Maartunn (@JA_Maartun) August 22, 2024
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Rising Bitcoin adoption and utility
Staking in decentralized finance (DeFi) is common among PoS chains, allowing crypto holders to generate passive income from their assets. While this practice is native to PoS networks, developers have been exploring ways to extend it to Bitcoin’s ecosystem.
The move effectively broadens BTC’s role in DeFi, at a time when institutional interest in crypto is growing. Wall Street giants like BlackRock and Fidelity were approved to launch spot BTC ETFs in January, and funds from traditional finance and crypto-native wealth managers have since accumulated over $50 billion in assets.
U.S. presidential candidates have mentioned creating a national BTC reserve and institutional ownership continued on the uptrend at press time.
Read more: Bitcoin ETFs attract $39.4m in inflows as Ether ETFs struggle with fifth consecutive day of outflows
