Babylon is the hottest project in the BTC ecosystem. It is like EgienLayer, which has ecological projects such as EtherFi, Puffer, and Renzo.
SatLayer is a protocol centered around the Babylon ecosystem and is the official Restaking cooperation protocol designated by Babylon.
Through SatLayer, Bitcoin staked in Babylon can be re-staked to provide Bitcoin-native security guarantees to other protocols or Dapps as a "Bitcoin Verification Service" (BVS).
SatLayer now supports a variety of mainstream Babylon's LST protocols, including Solv, Lombard, uniBTC, Lorenzo, pStake, pumpBTC, FBTC, etc., and supports the Ethereum network, BNB Smart Chain, BitLayer, etc. supported by these assets.
And now the staked BTC has multiple points. For example, if you stake SolvBTC.BNN of Solv protocol, you can get Solv protocol points, Sats (points reward provided by SatLayer), and babylon staking points. UniBTC depositors can not only get Sats² through a single LST deposit, but also uniBTC diamonds and Babylon rewards.
Babylon and SatLayer
Babylon is a Bitcoin staking protocol that cleverly uses Bitcoin's existing scripting language and UTXO model to implement the functions of the staking contract. Users can achieve secure BTC staking without transferring Bitcoin out of their own addresses. Babylon uses on-chain staking scripts and EOTS encryption mechanisms to perform self-custodial Bitcoin staking and revenue generation. This mechanism can trustlessly confiscate native Bitcoin when double signatures appear in the PoS chain.
However, Babylon only prevents validators from double signing. Due to the limitations of Bitcoin's scripting language, it cannot extend the slashing functionality to address other forms of misbehavior. SatLayer builds on Babylon's "slashable safety" guarantees, allowing developers to define arbitrary slashing conditions in smart contracts. These smart contracts are deployed on Babylon's CosmWasm smart contract chain through SatLayer, a Turing-complete execution layer. This approach allows for a wider range of and flexible slashing conditions for various types of misbehavior. By doing so, SatLayer significantly expands the scope of security that Bitcoin can provide, unlocking its full potential as a reward-generating asset.
SatLayer extends the functionality of Babylon by providing the following benefits:
● Enhanced security: Through programmable slashing, SatLayer can prevent a wider range of misconduct, making BVS safer.
● Extended use cases: The introduction of BVS is to build Dapps of various protocols using the security of Bitcoin.
● Improved capital efficiency: Bitcoin held in Babylon can be used to secure other protocols by re-stacking it, thereby improving capital efficiency.
Bitcoin Verification Service (BVS)
Through SatLayer, BVS can specify under what circumstances operators will be fined and pay operators based on off-chain calculations. SatLayer enables a variety of existing dApps and protocol categories to provide protection by Bitcoin collateral. This approach enables such applications to easily leverage the cryptoeconomic security guarantees supported by Bitcoin and solves the cold start problem of relying on the protocol's own utility token for basic security.
This extension has a wide range of applications
● Lending protocols can use re-hypothecated collateral as an insurance fund to manage bad liquidations.
● Data availability protocols ensure that nodes actually have the data they claim to store.
● The sequencer can ensure liveness and censorship resistance.
● Native Bitcoin DEX can use re-hypothecated collateral to perform secure trade settlement on the Bitcoin chain.
● Stablecoins backed by Bitcoin.
● Cross-chain bridges can facilitate seamless interoperability between Bitcoin L2/sidechains and other L1 ecosystems.
In general, SatLayer expands the functionality of Babylon beyond the basic pledge protocol to become a more general security platform. And this expansion can be widely applied to various ecological applications of BTC to promote the prosperity and development of the ecology.
