Will SatLayer, officially partnered with Babylon, take BTCFi to new heights?

Babylon is the hottest project in the BTC ecosystem, similar to EgienLayer, which has ecosystem projects like EtherFi, Puffer, and Renzo.

SatLayer is a protocol built around the Babylon ecosystem, which is the official designated Restaking collaboration protocol of Babylon.

Through SatLayer, stake in BTC in Babylon can be restaked to provide native security guarantees for other protocols or Dapps, serving as the "BTC Verification Service" (BVS).

SatLayer now supports multiple mainstream LST protocols, including Solv, Lombard, uniBTC, Lorenzo, pStake, pumpBTC, and FBTC, as well as the Ethereum network, BNB Smart Chain, and BitLayer supported by these assets and more.

And now, when staking BTC, you can earn multiple layers of points. For example, when staking Solvprotocol's SolvBTC.BNN, you can earn Solv protocol points, SATS (reward points provided by SatLayer), as well as stake points from Babylon. Depositors of UniBTC can not only earn Sats² by depositing a single LST, but also earn uniBTC BCD and Babylon rewards.

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Babylon and SatLayer

Babylon is a BTC stake protocol that cleverly utilizes BTC's existing script language and UTXO model to implement the functionality of a collateral contract. Users can securely stake BTC without transferring it out of their Address. Babylon achieves self-custody of BTC stake and income generation through on-chain stake scripts and EOTS encryption mechanism, which enables trustless slashing of native BTC when double signatures occur in PoS chains.

However, Babylon only prevents validators from double signing. Due to the limitations of BTC script language, it cannot extend the slashing function to address other forms of misconduct. SatLayer builds on Babylon's 'slashing safety' guarantee, allowing developers to define arbitrary slashing conditions in smart contracts. These smart contracts are deployed on-chain through SatLayer's Babylon CosmWasm smart contract, which is a Turing Complete execution layer. This approach allows for a wider and more flexible range of slashing conditions for various forms of misconduct. By doing so, SatLayer significantly expands the security scope that BTC can provide, unlocking its full potential as a reward-generating asset.

SatLayer expands Babylon's functionality by providing the following advantages:

● Enhanced security: Through Programmability slashing, SatLayer can prevent a wider range of misconduct, making BVS more secure.

● Expanded Use Cases: The introduction of BVS enables the construction of various protocols for Dapps using the security of Bitcoin.

● Improved capital efficiency: By restaking BTC in Babylon, it can be used to protect other protocols, thus improving capital efficiency.

BTC Verification Service (BVS)

Through SatLayer, BVS can specify when operators will be slashing, and calculate off-chain to pay operators. SatLayer enables various existing dApps and protocol categories to be protected by BTCCollateral. This approach allows such applications to easily utilize BTC-backed encryption for economic security guarantees and resolves the cold start problem of relying on the protocol's own practical Token to obtain basic security.

This extension has a wide range of applications.

● The lending protocol can use re-collateralized Collateral as a reserve fund to manage non-performing liquidation.

● Data availability protocol can ensure that Nodes actually possess the data they claim to store.

● Sorters can ensure activity and resistance to censorship.

● The native BTC DEX can use re-margined Collateral for secure trading Settlement on-chain.

● Stablecoin supported by BTC.

● Cross-chain bridges can facilitate seamless interoperability between BTC L2/sidechains and other L1 ecosystems.

Overall, SatLayer extends the functionality of Babylon, going beyond the basic stake protocol to become a more versatile and secure platform. Moreover, this extension can be widely applied to various BTC ecosystem applications, promoting the thriving development of the ecosystem.