Fisher Yu, the co-founder and chief technology officer (CTO) at the bitcoin staking protocol Babylon Chain, has argued that when staking bitcoin, stakers “do not need to trust or give their bitcoins to any third parties.” According to Yu, such an attribute helps to “eliminate the need for bridges and lenders” when staking bitcoins.
Bitcoin Network’s Inherent Properties and the Security of PoS Chains
The CTO told Bitcoin.com News that proof-of-stake (PoS) blockchains and app chains can also potentially benefit from the robust bitcoin-grade security that a bitcoin staking protocol brings. As explained in Babylon Chain’s whitepaper, bitcoin staking means holders of the top crypto asset can “trustlessly stake their bitcoins without bridging them to the PoS chain but yet provides the chain with full slashable security guarantees.”
Concerning the so-called blockchain trilemma (a network’s inability to simultaneously excel in security, scalability, and decentralization), Yu insisted that this can be overcome by “allowing bitcoin holders to stake their idle bitcoins,” which in turn helps to “enhance the overall economic security of PoS chains.” Yu, in the meantime, revealed how the Bitcoin network’s timestamping service “enables tight synchronization between the Bitcoin network and the PoS chains.” According to the CTO, it is this synchronization which enables “bitcoin stakers to have fast unstaking without affecting the PoS chains’ security.”
In the rest of his written answers sent to Bitcoin.com News via Telegram, Yu also explained how Babylon’s bitcoin staking protocol strikes a balance between security and PoS chains’ need for autonomy. Below are Yu’s answers.
Bitcoin.com News (BCN): In terms of security, the Bitcoin network has proved its resilience over the last 14 years. The network has never shut down and it is said that no bitcoin has been stolen from the chain. What is it about Bitcoin that makes it such a powerful foundation for security?
Fisher Yu (FY): Bitcoin’s robustness is founded on its decentralized nature and proof-of-work (PoW) consensus mechanism. As a decentralized network with no single point of failure, it is less vulnerable to attacks. The enormous computational power required to manipulate the Bitcoin network makes it economically infeasible for attackers, and Babylon leverages these inherent properties, and the asset it protects, i.e., the bitcoins, to enhance the security of PoS chains.
BCN: Your crypto project has introduced a bitcoin staking protocol that reportedly promises to bring Bitcoin security to PoS chains, applications and app chains while incentivizing the BTC holders. Bitcoin is said to lack native smart contract support and only offers limited scripting capabilities. So, how does Babylon make bitcoin staking a reality without relying on bridges or centralized lenders?
FY: The core of PoS security is slashable staking: If a validator of the PoS chain attacks it, its staked assets will be slashed. Thus, any slashable asset is a potential staking asset for a PoS chain.
Babylon’s Bitcoin Staking protocol turns bitcoin into a first-class staking asset for PoS chains: A bitcoin staker simply locks its desired amount of bitcoins on the Bitcoin network using a special signature algorithm already supported by the current Bitcoin network. The secret key to this lock will be leaked if and (very importantly) only if the Bitcoin staker attacks the PoS chain. Once leaked, it can be used to send the locked bitcoins (either entirely or partially) to a burn address using a covenant emulation technique supported by the existing Bitcoin scripting language. This way, the locked bitcoins are effectively a first-class staking asset: honest Bitcoin stakers’ bitcoins are absolutely secure, and they can earn yields, but malicious Bitcoin stakers will have their bitcoins slashed to secure the PoS chains.
Since all techniques in Babylon’s Bitcoin Staking protocol are already supported by the existing Bitcoin network, the protocol does not need any smart contract. Also, since the bitcoin locking is self-custodial on the Bitcoin network, the bitcoin stakers do not need to trust or give their bitcoins to any third parties, which eliminates the need for bridges and lenders.
BCN: The blockchain trilemma — a network’s inability to simultaneously excel in security, scalability, and decentralization — remains an unsolved issue. Some PoS chains have done fairly well in terms of scalability and decentralization. Do you think the additional Bitcoin security provided by your protocol could help the PoS ecosystem solve the trilemma?
FY: Absolutely. Babylon’s Bitcoin Staking protocol addresses both the security and decentralization aspects of the Blockchain Trilemma for PoS chains. By allowing bitcoin holders to stake their idle bitcoins, we enhance the overall economic security of PoS chains. In addition, the Bitcoin network is the most decentralized network in the world, making Babylon’s Bitcoin Staking protocol the most decentralized staking mechanism. These, in turn, empower PoS chains to focus more on scalability without compromising security or decentralization.
From another perspective, Babylon’s Bitcoin Staking protocol also helps the Bitcoin network to solve its trilemma. Being the most secure and decentralised network, Bitcoin has very little scalability. Babylon’s Bitcoin Staking protocol integrates the Bitcoin network with the vast PoS world, which effectively scales it.
BCN: The Bitcoin network has limited capabilities and slow transaction speeds. Would recording the PoS chains’ mass transactions on the Bitcoin network deteriorate its transaction speed?
FY: Babylon’s Bitcoin Staking protocol provides economic security to PoS chains through staking. It does not require PoS chain transactions to be posted to the Bitcoin network at all. Having this said, the protocol does utilize advanced signature aggregation techniques that allow Babylon to obtain Bitcoin timestamps for any PoS chains. The footage is only 150 bytes per timestamp on the Bitcoin network no matter how many PoS chains are aggregated and timestamped. With this timestamping service, the protocol enables tight synchronization between the Bitcoin network and the PoS chains, which allows bitcoin stakers to have fast unstaking without affecting the PoS chains’ security.
BCN: When looked at from a PoS chain or app chain’s perspective, would relying on the Bitcoin Staking protocol for security compromise their autonomy?
FY: Babylon’s Bitcoin Staking protocol is a modular design that does not affect the autonomy of the PoS chains. From a consensus perspective, it adds extra block finality to PoS blocks without interfering with the base consensus protocol of the PoS chain. From a governance perspective, bitcoin stakers do not participate in the on-chain governance voting if there is any. From an economic perspective, the PoS chain has the full power to decide how much Bitcoin stake to take and how much rewards to give.
BCN: The security needs of blockchains and app chains are constantly evolving in the multi-chain world with numerous sovereign and interconnected app chains. How does the Bitcoin staking protocol help secure cross-chain transactions, if at all?
FY: Babylon’s Bitcoin staking protocol greatly enhances the security of both the two counterparty chains, which means the actual transactions under the hood of the cross-chain trading become more secure. In addition, the protocol itself acts as a control plane for all the PoS chains and, thus, can also be used to settle cross-chain transactions. Moreover, when two chains use a decentralized bridge to facilitate their trading, Babylon’s Bitcoin staking protocol can be used to secure the decentralized bridge itself, which is otherwise usually the weakest spot of the trading.
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