Babylon: Remote Staking of Bitcoin and Enhanced Security for PoS Chains

The Babylon project aims to leverage the economic security of Bitcoin and the Cosmos IBC cross-chain communication technology to provide additional security guarantees for PoS blockchains. Its core idea is to allow BTC holders to provide security support for other PoS blockchains through a unique staking mechanism without leaving the Bitcoin network, and to earn corresponding rewards. This innovative model combines the advantages of Proof of Work ( PoW ), providing a beneficial supplement to the security of Proof of Stake ( PoS ) systems.

Main Features

1. Remote stake: BTC is kept on the Bitcoin mainnet for staking.

2. Customizable staking contracts: Customize UTXO operations through Bitcoin scripts and restrictive clauses to achieve staking lock-in functionality.

3. Cross-chain communication: Utilizing the Cosmos IBC protocol to achieve data transmission between Bitcoin and other blockchains.

4. Security Enhancement: Record the key data hashes of the PoS chain onto the Bitcoin blockchain, forming "checkpoints" to provide these data with immutable timestamp proof.

System Architecture

The overall architecture of Babylon includes the following key components:

• Bitcoin Mainnet
• Babylon Aggregation Layer
• IBC communication protocol
• Target PoS Consumption Chain

Babylon acts as an aggregation layer, connecting Bitcoin and various PoS blockchains. BTC holders can choose a target network for staking on Babylon, and then lock their BTC on the Bitcoin mainnet. The Babylon layer is responsible for aggregating key data from the PoS chains and regularly sending the data to the Bitcoin network to establish "checkpoints" via IBC.

Technical Implementation

1. Remote stake: Allows BTC holders to provide staking services to other networks without transferring assets.

2. Customized staking contracts: Create special transaction types using Bitcoin scripts and restrictive clauses to achieve BTC staking lock.

3. Data Submission and Verification:

   • PoS chain nodes generate important data hash
   • Babylon aggregates and packages hash data
   • Submit data to the Bitcoin blockchain via IBC
   • Generate timestamp to form "checkpoint"
   • PoS chain uses timestamps to verify data

4. Security Mechanism:

   • Use Schnorr signatures and EOTS( to extract one-time signatures )
   • Schnorr signatures are used for efficient handling of BTC stake signer signatures.
   • EOTS is used to detect double spending attacks and automatically enforce penalties.

Market Potential

Currently, the single-coin yield market for Bitcoin generally has a yield rate between 0.01% and 1.5%. Considering the enormous scale of idle BTC, if Babylon can offer a yield rate close to 8%, it could attract a market scale of tens of billions of dollars.

Problems Solved

1. Provide native staking opportunities for Bitcoin while maintaining high returns.
2. Reduce the security budget of the PoS chain
3. Securely supplement through PoW to mitigate the "long-range attack" risk.
4. Increase the threshold for PoS chains to resist active attacks.

Comparison with Eigenlayer

1. Restrictions:

   • Lack of smart contract support makes it difficult to实现复杂功能
   • Currently mainly relying on the IBC ecosystem

2. Advantages:

   • There is great potential for the idle Bitcoin market.
   • Provide economic security support for small-scale PoS chains

3. Differences:

   • Babylon focuses on mitigating long-range attacks and shortening the stake lock-up period.
   • Eigenlayer utilizes the Ethereum ecosystem to provide diversified services through smart contracts.

Overall, Babylon provides an innovative security enhancement solution for Bitcoin holders and PoS chains, which is expected to play an important role in the future blockchain ecosystem.