What is Bitcoin staking?
Last Updated:
November 25, 2024
Bitcoin staking allows holders to secure Proof of Stake (PoS) protocols and earn rewards natively on the Bitcoin chain.
It enables Bitcoin to act as a stakable asset in PoS systems without requiring users to send their Bitcoin to a third party or bridge it to another blockchain and is achieved through the use of Bitcoin scripts and advanced cryptography, creating a "staking contract" that resides on the Bitcoin blockchain.
Bitcoin staking involves several definitive features, such as:
- Locking – Involves rendering assets immobile for a set period to participate in securing the network so that the stakers cannot act maliciously and run.
- Unstakable – Means that the staker can exit the system and get tokens back via unstaking.
- Slashing – Entails staked assets to be burned (destroyed) if a staker misbehaves or violates the network's rules.
Further, Babylon Bitcoin staking enablers several other features:
- Delegatable – Users can delegate their stake to another validator without giving up custody of their asset.
- Partial-slashing – Stakers only get a fraction of their assets slashed for misbehavior rather than losing the entirety of their stake.
- Re-stakable – Assets can be staked across multiple PoS networks simultaneously to maximize utility and rewards.
Importantly, Babylon Bitcoin staking prioritizes the safety of users' Bitcoin so that their bitcoin cannot be stolen and remains safe even if the PoS system is compromised.