Babylon and SUI partner with Lombard to launch LBTC (liquid-staked Bitcoin)

Babylon Labs and Lombard have announced plans to launch liquid-staked version of Bitcoin through the SUI network. The new collaboration between the three innovative DeFi players will allow holders of Bitcoin to do more with their idle assets. 

Bitcoin users will be able to stake their BTC and receive LBTC from the Lombard protocol. The liquid-staked LBTC will help unlock Bitcoin liquidity for use in lending, borrowing, or trading purposes. 

Let’s briefly discuss liquid staking and how the Bitcoin ecosystem can benefit by incorporating this innovative service. 

What is Liquid Staking?

Proof of Stake systems lock up tokens (stake) from participants who agree to run validation nodes. Users can also delegate their tokens rather than running nodes themselves. 

Good validators are rewarded by passive income in the form of tokens that are distributed at regular intervals and bad behavior is penalized by slashing the staked tokens. Earlier, staked tokens could not be used unless unbonded. 

Liquid staking has emerged as a solution for users who wish to do more with their staked tokens. A representative liquid staked version of the staked token is handed over to the holder which can be used for various purposes such as lending, borrowing, or for other uses in DeFi protocols. The original staked token can be claimed at any time by depositing the liquid tokens. 

While liquid staking has been popular in Ethereum through Eigen Layer and other altcoins, the Bitcoin ecosystem is yet to be fully explored. This changes with the launch of LBTC through Babylon on the SUI network.  

Babylon is rapidly innovating to provide passive returns for Bitcoin users

Unlike other proof-of-stake (PoS) networks, Bitcoin is built on the proof-of-work (PoW) consensus mechanism. While it provides top-notch security and handsome rewards to miners, holders of Bitcoin are left out of passive yield income scenarios. They are unable to utilize their purchased Bitcoins and are forced to wait for price appreciation or risk bridging their assets to other chains. 

Babylon has emerged as an innovative protocol for unlocking the dormant economic value of the Bitcoin ecosystem. While networks that integrate Babylon can gain from the unmatched economic security of the Bitcoin network, stakers can also earn attractive passive yields. Stakers can also delegate their voting power to various PoS networks. 

Babylon is highly scalable, has fast unbonding periods, and is on a partnership spree with many networks already integrated. Babylon was founded just two years back and allows users to earn staking rewards without the need for third-party services, bridges, or swap protocols. 

In the past, Babylon has also inked partnership agreements with other liquid staking Cosmos protocols such as Persistence and Stride. 

SUI Babylon partnership might emerge as a game changer for the broader DeFi landscape

Sui network is known for high-speed transactions and is a highly scalable layer 1 network. Powered by sponsored transactions (no fees for users) and Zklogin, SUI enables lower entry barriers for Web3 developers. 

With a TVL of $1.40 billion as of writing, SUI is the second most popular network in terms of transaction volume in 2024. SUI already offers cross-chain bridges connecting multiple and diverse networks. 

With this new exciting partnership with Babylon, SUI could help capture the capital efficiency of Bitcoin and utilize it in new ways. The entire Web3 ecosystem could undergo a massive change soon and Bitcoin holders can explore new methods to earn yields without having to sell assets. 

Conclusion

Traditional finance offers participants the ability to lend, borrow, or lock in assets for interest yields but Web3 is fast catching up blurring the lines between the two sectors. 

The opportunities for Web3 are immense and opening up the Bitcoin ecosystem through liquid staking tokens could help in unlocking new frontiers. Earn passive income without the need to sell your bitcoins through Babylon and SUI. A whole new world of DeFi is finally open to Bitcoin holders through this upcoming service.