Bitcoin Staking Goes Live as Babylon Unlocks Shared Security

The breakthrough: Bitcoin starts securing other chains

On April 10, 2025, Babylon switched on a simple but radical idea. Instead of leaving Bitcoin idle, holders can lock native BTC in a self custodial script and delegate its economic weight to help secure proof of stake networks. Babylon calls the network that coordinates this flow Genesis, and it launched in what the team describes as Phase 2 of its roadmap. Babylon’s own announcement set the date and design in plain terms, including a dual staking model that combines BTC security with a new BABY token for chain operations and governance Phase 2 launch details.

That single change reframes what Bitcoin can do. It moves from a passive store of value to a source of slashable security that other chains can rent. If you prefer a metaphor, think of Bitcoin as a gigantic, silent battery that now has an outlet. Babylon is the outlet adapter. Genesis is the switchboard that routes current to whoever pays for it and does the work to plug in.

What “native, self custodial BTC staking” actually means

Most attempts to move Bitcoin into decentralized finance have depended on bridges and wrapped tokens. Those designs put a smart contract or a custodian between you and your coins. Babylon avoids this. Your BTC never leaves the Bitcoin blockchain.

Here is the core flow in everyday terms:

1. You create a time locked output on Bitcoin. Your stake is a specific unspent transaction output that is locked by your keys plus a set of protocol conditions. You keep your keys. The lock is visible on Bitcoin and you can verify it with any block explorer.

2. You delegate that locked output to one or more Finality Providers. Finality Providers are professional operators that sign finality votes for proof of stake chains which choose to inherit Bitcoin backed security from Genesis. You can think of them as specialized validators whose job is to make attack costs real by putting their delegated Bitcoin at risk for misbehavior.

3. You earn rewards. Rewards today primarily come in BABY and in the reward tokens paid out by the networks your stake secures. As Babylon enables multi staking, a single BTC position can support multiple networks at the same time and aggregate multiple reward streams.

4. You can unbond on demand. When you request to unbond, your BTC remains locked for a fixed window expressed in Bitcoin blocks. Babylon’s current parameters target roughly two days. After that window your UTXO becomes spendable again under your key.

That is the essence of native and self custodial. The stake is a Bitcoin script you control. Delegation is a message to the Babylon control plane. Rewards come from the networks your stake secures. Unbonding is a function of Bitcoin time, not an off chain promise.

How slashing and safety work under the hood

Slashing is the economic stick that backs security guarantees. Babylon narrows slashing to one category that truly matters for consensus safety: double signing. The protocol uses an exotic but simple to explain signature primitive called an Extractable One Time Signature. Sign once and you are fine. Sign twice at the same height and the key reveals itself, which lets anyone on the Bitcoin network publish a valid penalty transaction. This means slashing is enforced at the Bitcoin layer and does not depend on a bridge, custodian, or the target chain.

Babylon also separates risks:

• Finality Providers shoulder the main slashing risk for bad behavior. Operators that equivocate can be slashed and jailed.
• Stakers opt into a partial slashing rate when they delegate. The design avoids the catastrophic loss profiles that some proof of stake systems impose on retail stakers. During unbonding your position remains partially slashable until the timer expires, which keeps incentives intact while you exit.
• Downtime is treated mainly as lost rewards and potential jailing rather than a slash event. That aligns incentives with reliability without scaring away capital.

Why this is attractive to BTC holders

• Keep keys. Your Bitcoin never leaves the Bitcoin chain and remains spendable by you after the time lock expires.
• On chain visibility. You can verify the lock and the timer yourself. No ticket to a support desk required.
• Rewards that scale with demand for security. As more chains or rollups plug into Genesis, the market for Bitcoin backed security deepens.

The big shift: repricing crypto security and yields

Security on proof of stake chains is not free. Every network pays for it through token issuance or fees that are distributed to validators and delegators. Until now, each chain had to bootstrap its own capital base and convince investors to lock that specific token for a specific yield. That fragmented demand and created wildly different security budgets.

A shared BTC security market compresses those spreads. If Bitcoin can secure many chains at once, and if a single BTC stake can be pointed at multiple networks, then capital finds the best risk adjusted returns across the whole market. Chains that used to overpay to attract validators may be able to pay less, because the marginal provider is reusing the same BTC stake across several clients. Chains that underpay relative to risk will need to raise reward rates or improve their safety profile to attract Finality Providers.

The likely outcome is a new reference yield. Call it the BTC security rate. It will float based on how many networks are competing for BTC backed finality, how much risk Finality Providers take on, and how liquid the BTC staking exit window remains. As with any benchmark, it will not be the only rate that matters, but it will become a number that founders, validators, and treasurers use in budget meetings.

Multi staking and the EVM upgrade: the next unlocks

Babylon’s roadmap makes the intended direction very clear. The team plans to ship Bitcoin multi staking and full Ethereum Virtual Machine support this year, with testnets in the third quarter and mainnet upgrades in the fourth quarter, followed by liquidity layers in early 2026. The core idea is that one time locked BTC position can secure several chains simultaneously and that developers can deploy familiar Ethereum style applications directly on Genesis. The public roadmap lays out these milestones and the first set of target integrations, including prominent Ethereum rollups and Cosmos sovereign chains Babylon’s 2025 roadmap.

For context on how L2s are evolving, see our analysis of how permissionless proofs hit L2s and why sequencer wars go permissionless. These shifts make it easier for rollups to adopt external finality and shared security.

Why this matters for users and builders:

• One stake, many jobs. A single UTXO can help finalize multiple networks. This increases the reward surface without increasing custody risk.
• EVM on Genesis. Bringing Ethereum tooling to a Bitcoin secured control plane allows lending, trading, stablecoins, and other primitives to run close to where BTC sits. That reduces the friction that has kept many Bitcoin holders on the sidelines.
• A cleaner path for rollups. Rollups that today rent security from their base chain can add a second line of defense backed by BTC. If a rollup wants to broadcast strong finality guarantees, it can point to Bitcoin anchored checkpoints and a slashable Finality Provider set.

BTCFi goes from idea to useful flow

If Bitcoin is the internet’s base collateral, it must be easy to pledge, verify, and settle across many contexts. Babylon’s design begins to deliver that. Here is how concrete use cases play out when native staking is the foundation:

• Lending desks and stablecoins. A lender can accept a time locked BTC UTXO as collateral because it is verifiable on Bitcoin and the lock terms are public. With EVM support on Genesis, the rest of the loan lifecycle can be automated and monitored without moving the BTC.
• Perpetuals and prime brokerage. Traders can delegate their BTC for security and post a liquid staked representation of that position as margin on Genesis based venues. If the trader unbonds, the margin representation decays in value during the exit window, which mirrors the real risk that the stake is still slashable.
• Treasury management for companies. Public companies and mining firms that hold BTC can earn a programmatic security yield with strict self custody controls and a two day exit clock they can show auditors. For macro context, see our take on a potential U.S. Bitcoin reserve thesis.

What to watch in the next 3 to 6 months

Babylon’s launch is a starting line, not a finish. If you are evaluating where to build, stake, or integrate, track these signals.

• Validator and Finality Provider incentives

  • What to watch: The split between rewards paid in BABY versus external network tokens. The emergence of tiered commission models that reward uptime and low slash risk. The number of Finality Providers in the active set and their delegation concentration.
  • Why it matters: BTC capital will migrate to operators with the best net of reward, reliability, and risk controls. A more diverse operator set raises economic attack costs for everyone using Genesis.

• Slashing and timeout risks

  • What to watch: Published parameters for the unbonding window, minimum fees for slash transactions on Bitcoin, and any real slashing incidents. Whether downtime results in jailing only or triggers secondary penalties on integrated networks.
  • Why it matters: Slashing must be rare but credible. A too short exit window can weaken penalties if Bitcoin fees spike. A too long window can choke liquidity and lower the appeal to large stakers.

• Liquidity design for BTC staking

  • What to watch: How liquid staked BTC tokens handle redemptions during the two day unbonding window. Whether projects choose a strict one to one redeem queue or introduce market making backstops. Secondary market discounts to net asset value during stress. Whether protocols adopt conservative guardrails such as withdrawal caps and time based throttles.
  • Why it matters: Liquidity is where theoretical trustlessness meets user reality. If liquid staking tokens hold their peg and redeem smoothly, BTCFi scales. If not, capital will sit on the sidelines.

• AVS style services and data layers

  • What to watch: Integrations that look like actively validated services. Examples include oracles, data availability, and off chain compute networks that accept BTC backed finality. The mix of revenue these services pay versus rollups and sovereign chains.
  • Why it matters: If Finality Providers can earn from multiple categories of work, the BTC security rate becomes more stable and chains can plan their budgets more confidently.

• Rollup and Layer 2 integrations

  • What to watch: Concrete pilots on major Ethereum rollups. How those rollups expose Bitcoin anchored finality to their users and whether they route a portion of fees or token incentives to BTC stakers through Genesis. The effect on settlement assurances for cross chain bridges and high value applications.
  • Why it matters: Real integrations convert a white paper into network effects. If rollups prove that BTC finality reduces attack cost or improves user trust, others will follow.

• User access and compliance

  • What to watch: Exchanges and custodians offering one click native BTC staking. Insurance options for operational risk. Geographic coverage, especially for United States based users, and clear disclosures about partial slashing during the unbonding period.
  • Why it matters: Convenience and compliance considerations often decide whether the next billion dollars shows up.

Concrete implications for builders and investors

• Builders on new chains: Budget security like a subscription. Instead of overpaying in your own token to lure validators, model a blended rate that includes BTC finality. Price it against a public BTC security rate and prove to users that attacks would be uneconomic.

• Existing rollups: Use Bitcoin anchored checkpoints as a second line of defense. Advertise a simple assurance to your users. If a finality violation occurs and a Finality Provider double signs, a Bitcoin transaction burns real BTC. That clarity is marketing and security at once.

• Validator operators: Treat Finality Provider operations like a regulated prime service. Two action items stand out. First, implement bullet proof anti double sign infrastructure with split key signing and strict operational runbooks. Second, publish a public risk dashboard with uptime, slash history, and commission. Delegators will gravitate to operators that treat slashing as a professional liability to be engineered out.

• Protocol treasuries: Shift idle BTC into a ladder of stakes with staggered unbonding windows. Keep a tranche in liquid staked form for market operations and governance. Measure proceeds against your cost of capital and rebalance into multi staking once production ready.

The bigger picture: Bitcoin as the internet’s base collateral

The internet runs on a few forms of collateral. In finance, it is dollars and government bonds. In web3, it has been the native token of whichever chain you use, with all the idiosyncrasies that implies. By making Bitcoin usable as shared security without giving up keys, Babylon lets the largest, most widely held crypto asset become the common denominator for trust across chains.

That shift does not happen overnight. It depends on operators avoiding double signs, on liquidity providers designing sane redemption flows, on rollups and sovereign chains proving real improvements to user safety. But the direction is clear. Every month that Genesis routes more work to BTC and more networks publish Bitcoin anchored finality, the market’s pricing of security converges and the on ramps for mainstream users widen.

The story started with a simple launch date and a bold claim. The next chapters will be written by how well the ecosystem executes on multi staking and EVM support, and by whether BTC holders find that the yields are worth the two day lock. If Bitcoin really becomes the base collateral for the internet, we will remember April 2025 as the moment the outlet adapter snapped into place and the current started to flow.