Babylon Phase Two Stake: $1.2 billion funds surge, who is still keen on BTC staking?

Recently, the Bitcoin staking protocol Babylon completed the second stage (Cap-2) of staking. Although the staking lasted only 10 blocks, it attracted nearly 23,000 BTC to participate. However, compared to the first stage, the community enthusiasm and on-chain fees for this staking have significantly decreased. The main reasons for this are as follows:

Why does the Cap-2 stage stake seem calm?

1. Stake Rule Adjustment

Cap-2 adopts a "limited time unlimited amount" staking mechanism, lasting for 10 blocks. At the same time, the single staking limit has been increased from 0.05BTC to 500BTC. This change greatly alleviates users' sense of urgency and is more suitable for the needs of institutions and re-staking projects.

2. Stake Points Dilution

Cap-2 points generated per block increased to 10,000 points, but due to the significant increase in total stake, the points earned per unit of BTC were severely diluted. This has somewhat affected user participation enthusiasm.

3. Dominated by institutions and project parties

Data shows that the proportion of re-staking projects in Cap-2 has approached 90%, while the proportion of native stakers may be less than 10%. The main force of staking has clearly shifted to institutions and re-staking projects, with reduced participation from ordinary users.

Main Re-staking Protocol Performance

According to statistics, the total staking share of the seven mainstream Babylon re-staking protocols in Cap-2 is approximately 90%. Among them, Lombard stands out with a stake of 7166 BTC, accounting for 31.66% of the total in Cap-2. It is noteworthy that the platform staking rates of Solv, Chakra, and pSTAKE have all reached 100%.

Reflections on the Re-Staking Agreement

Although re-staking protocols provide users with convenience and additional benefits, they have also raised some concerns about security. These protocols act as "staking intermediaries" between users and Babylon, which may contradict Babylon's emphasis on trustlessness and the self-custody concept of BTC.

Previously, the Bedrock incident, which resulted in a loss of about 2 million USD due to an attack, has raised users' doubts about the security of the re-staking protocol. If the security issues of the re-staking protocol are not properly resolved, or if the native staking ratio continues to decline, it may affect the long-term development of the Babylon ecosystem.

How to balance security considerations while pursuing returns and convenience has become an important issue faced by the Babylon ecosystem. In the future, the security upgrades of re-staking protocols and the increase in the native staking ratio may become key factors in determining whether Babylon can truly unlock the potential of BTC.