The rapidly emerging trend of “restaking” within Ethereum blockchain circles is now extending to Bitcoin, the blockchain with the highest market value.
Restaking allows users to earn additional interest by utilizing their staked assets to support the security of other blockchain applications. Observing its rising popularity, developers from various ecosystems, including Solana, are exploring ways to integrate this feature.
Expansion to Bitcoin
This increasing interest led to the inevitable expansion of restaking to Bitcoin. In a strategic move, startup Lombard, in collaboration with the Bitcoin staking protocol Babylon, has successfully raised $16 million to develop Bitcoin-based restaking solutions.
This initiative not only taps into the restaking buzz but also positions Lombard as a frontrunner in bridging Bitcoin with the broader decentralized finance (DeFi) sector, where Bitcoin has previously had limited involvement.
Lombard aims to transform Bitcoin from a mere store of value into a productive asset that engages with the Web3 economy, thereby driving sustainable growth, according to a statement the company released.
The funding round, led by Polychain Capital, also included participation from entities such as BabylonChain, Inc., dao5, Franklin Templeton, Foresight Ventures, Mirana Ventures, Mantle EcoFund, and Nomad Capital.
Restaking debuted on Ethereum through EigenLayer, quickly becoming a significant DeFi success. In less than a year, EigenLayer amassed $18 billion in deposits by promising additional interest on assets users had already staked to secure Ethereum.
The protocol pools these “restaked” assets to safeguard a network of other crypto protocols based on proof-of-stake security. Essentially, EigenLayer and similar protocols assist new blockchain applications in boosting their security and offer investors innovative ways to leverage their cryptocurrency holdings.
Building on Babylon’s foundation, Lombard’s venture into restaking permits the use of bitcoin to secure other proof-of-stake networks. This new phase builds upon a substantial $70 million investment previously led by Paradigm into the BTC staking company.
Introduction of Liquid Bitcoin Tokens
A key innovation from Lombard is the creation of “liquid bitcoin” tokens, or LBTC, which serve as tradable receipts for deposits made with Babylon. These tokens are designed to allow users to maintain liquidity over the bitcoins they have staked across different networks.
Lombard’s integration of major ecosystems and DeFi protocols to support LBTC could potentially unlock over $1.3 trillion in Bitcoin, providing ample opportunities for bitcoin holders to lend, borrow, and trade, thus attracting new capital and users to the ecosystems and their protocols.
Initially, Ethereum’s ETH token was the asset of choice for staking on EigenLayer, largely due to its price stability, which is vital for the security of proof-of-stake networks. Bitcoin, known for its substantial market value and relatively low volatility, is also seen as a prime candidate for restaking.
At the time of reporting, one BTC was valued at $63,000. Olaf Carlson-Wee, founder of Polychain Capital, emphasized the investment in Lombard as a testament to their deep belief in Bitcoin’s capacity to catalyze growth throughout the blockchain sector.
The application of restaking to Bitcoin exemplifies a growing trend. Established cryptocurrencies are being used to bolster the security and features of Decentralized Finance (DeFi), a burgeoning ecosystem of financial applications.
This unlocks new investment opportunities and paves the way for a deeper integration of traditional finance with the digital asset world.
Credit: Source link