After bringing liquid staking to Cosmos in 2021, pSTAKE has announced the launch of a staking solution for BTC. It is still in the developmental stages and BTC deposits will start soon in the coming weeks.
The protocol will enable staking for the largest crypto asset to secure decentralized platforms built on proof-of-stake (PoS) chains. It’ll also let BTC holders earn yield on their otherwise ideal assets.
BTC Remains Isolated from PoS Staking
In Ethereum and layer-1s, staking lets users holding the native asset of a PoS chain stake or lock the assets in return for a yield. The deployed capital is then used to secure the protocols on the PoS chain.
On the contrary, Bitcoin has only recently started seeing major advancements beyond its use as a peer-to-peer payment network.
That means BTC holders have limited choices when it comes to participating in financial services like staking. Even in cases where its possible, users have to trust a third party to wrap their BTC and move it to a different chain.
This introduces a security risk, keeping a majority of the trillion dollar worth of assets inaccessible from staking to secure PoS chains or any other financial services.
The question lurked, how do we securely enable the use of the largest crypto asset — BTC — in the capital-intensive staking security mechanism?
Plugging BTC In PoS Staking Through pSTAKE and Babylon
pSTAKE Finance, Persistence’s multi-chain liquid staking protocol, is introducing a platform for staking Bitcoin. The platform is being built on the BTC staking protocol Babylon. The Binance Labs-backed pSTAKE will expand its services by offering BTC staking to help users earn additional yields.
pSTAKE’s liquid staking unlocks liquidity for staked assets by issuing representative tokens that users can deploy on DeFi protocols.
pSTAKE users can utilize the staked assets’ liquidity without unstaking or unlocking the staked asset to earn extra yields over the standard staking rewards. The protocol works across Cosmos, Ethereum, and Binance Chain, and is expanding to Solana and now Bitcoin.
Babylon helps BTC holders generate yields by simply locking their coins in a self-custodial manner without involving any third parties or bridges. Thus, BTC users can leverage their idle assets to validate PoS chains and earn extra yields while their assets remain on the Bitcoin network.
Moreover, Babylon’s unbonding feature will allow pSTAKE users to opt-out whenever they want to.
Overall, pSTAKE Finance will bring enhanced utility to BTC and consolidate the Bitcoin DeFi ecosystem. It will further propel users to tap into the trillion-dollar asset class to simultaneously secure PoS chains and participate in DeFi protocols.