Polychain Capital and Hack VC led an $18 million Series A funding round for Babylon Chain, a Bitcoin (BTC) staking protocol that connects the decentralized finance (DeFi) ecosystem and the Bitcoin blockchain.
According to a December 7 announcement, the funds will be used to support the development of Babylon’s Bitcoin staking protocol, which will allow proof-of-stake (PoS) networks to stake BTC, adding liquidity and security to emerging chains. It will.
For context, a PoS chain is a type of blockchain that relies on participants to verify transactions. To become a validator and create new blocks, participants must stake the chain’s native coin. The security and integrity of a PoS chain depends on the amount of coins staked. However, Bitcoin uses a different mechanism called Proof of Work (PoW). Here, miners verify transactions by solving complex mathematical problems.
Babylon wants the two worlds to merge into one. The startup launched its Bitcoin Staking Minimum Viable Product last October, saying it would strengthen the security of emerging chains while also providing a platform for PoS chains that can rely on Bitcoin to raise capital through staking. It was claimed that this would help reduce inflationary pressures.
According to the startup’s light paper, the biggest challenge is “remotely eliminating all safety violations without smart contracts on the Bitcoin chain.” To solve this problem, the protocol claims to use responsible assertions, finality gadgets, Bitcoin emulation, and timestamps. “Our configuration is modular and can be used on top of any PoS consensus protocol. Implementing the Bitcoin staking protocol does not require a soft fork or hard fork of Bitcoin,” Babylon wrote.
Staking could pave the way for more developers to build solutions on the Bitcoin network, which is one of the challenges the original blockchain faced. Bitcoin, the first and most prominent cryptocurrency, has a market capitalization of $847.8 billion at the time of this writing. A Glassnode report found that 66% of circulating supply has been dormant for at least a year.
“Babylon can not only unlock the largest blockchain assets, but also enable Bitcoin-enabled security services (e.g. data availability services) across the broader blockchain ecosystem,” said Alex Pack, Managing Partner at HackVC. He said.
Additional investors in this round include Framework Ventures, Polygon Ventures, Castle Island Ventures, OKX Ventures, Finality Capital, Breyer Capital, Symbolic Capital, and IOSG Ventures.
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