Universal BTC Liquid Staking

uniBTC is a staked version of BTC that accrues Babylon staking rewards and Bedrock Diamonds, maintaining a 1:1 ratio with WBTC. uniBTC offers Bitcoin holders the ability to earn staking rewards without redeeming their assets, providing a secure and seamless restaking solution on Ethereum and multiple other networks.

Bedrock is a liquid restaking protocol supporting multiple assets, including WBTC, ETH, and IOTX, offering non-custodial solutions. Its universal token model, represented by uniBTC, uniETH, and uniIOTX, unlocks liquidity while accruing staking rewards and Bedrock Diamond points, providing secure and efficient yield generation across various blockchain networks.

uniBTC staking allows WBTC holders to stake BTC on the Babylon network through two methods:

Proxy Staking: WBTC is staked on Ethereum while a trusted party stakes the corresponding BTC on Babylon.

Direct Conversion: WBTC is instantly redeemed into BTC and staked directly on Babylon.

Liquid staking allows users to stake their assets while maintaining liquidity. Instead of locking your tokens in a staking contract, liquid staking provides a derivative version of the staked asset, which can be used across DeFi platforms to earn additional yields. This enables users to continue earning staking rewards without losing access to their staked tokens for trading, lending, or other DeFi activities.

Bitcoin Liquid Staking enables BTC holders to stake their Bitcoin while keeping it liquid for use in DeFi. This is made possible through integrating the Babylon Chain, a Bitcoin staking protocol. Babylon's infrastructure allows for secure staking of Bitcoin in a decentralized manner, turning BTC into a yield-generating asset. Babylon Chain uses wrapped BTC tokens on Ethereum to enable cross-chain staking without compromising Bitcoin’s security. Through this protocol, users can stake BTC and receive a liquid token representation that can be used across DeFi while continuing to earn staking rewards.

BTC staking based on Babylon allows Bitcoin holders to lock their BTC in a trustless, self-custodial Bitcoin Staking script for a set period (timelock), gaining voting power in a Proof-of-Stake system. In return, they earn PoS staking rewards. Voting is carried out by finality providers, either self-created or third-party providers to whom BTC holders can delegate their voting power.

There are no rewards for securing the PoS networks currently. Bitcoin liquid staking rewards will be generated primarily through restaking on the Babylon Chain and securing PoS networks. Additionally, users can earn Babylon Points, which track participation in the protocol and are distributed to active stakers.

In the case of uniBTC, users can earn additional ​​Bedrock Diamonds which are loyalty rewards distributed to users who actively mint and hold uniBTC, with extra opportunities to earn through various campaigns within the Bedrock ecosystem.

Users are not directly exposed to PoS slashing risks since they do not sign slashing-related authorizations. However, risks such as code vulnerabilities and system reliability issues could still affect your staked assets. While Bitcoin Liquid Staking offers opportunities for rewards, it also comes with certain risks:

Code Vulnerabilities: The staking process depends on smart contracts, which may contain bugs or security flaws. Protocols should strive for open-sourced code and security audits, but potential risks remain.

System Stability: The Bitcoin Staking system may experience disruptions, such as downtime or performance issues, resulting in difficulties unbonding or withdrawing your BTC. Despite thorough auditing, system reliability remains a key concern.

Bitcoin Blockchain: The blockchain may experience increased traffic, raising transaction fees and causing delays in including submitted transactions into the mined block.

Cross-Chain Risk: Since liquid staking often involves using wrapped assets on other chains, there's an inherent risk associated with the cross-chain bridge or the wrapped asset itself.

Liquidity Risk: The ability to trade or redeem Bitcoin LSTs depends on the available market liquidity. You may face difficulties selling or swapping your staked assets if liquidity dries up.

Price Depegging Risk: LSTs can deviate from the underlying asset’s price, especially during market volatility, leading to potential losses upon withdrawal. Low liquidity in pools can exacerbate depegging, causing high slippage and difficulty selling staked assets.

Unstaking Time: Protocols that enable Bitcoin Liquid Staking and are building on Babylon Chain infrastructure are subject to withdrawal delays. The unstaking time in the current phase takes around 7 days to process.