A New Genesis for Bitcoin Gives You 3 Ways to Profit
 |
| By Jurica Dujmovic |
Bitcoin (BTC, “A-”) is the venerable patriarch of crypto.
But despite accounting for nearly two-thirds of the entire crypto market's value, it has a productivity problem.
For years, BTC holders have faced a stark choice: Keep your bitcoin secure but dormant, or venture into centralized lending platforms with their inevitable "not your keys, not your crypto" disclaimers.
Remember, Bitcoin is a proof-of-work (PoW) network, not proof-of-stake (PoS). As such, it does not allow native staking on its blockchain.
This inefficiency is staggering when you consider the scale. Glassnode estimates over 60% of all BTC hasn't moved in over a year.
That's hundreds of billions in capital sitting idle!
That could change soon, though. A new player in the crypto market could wake this financial sleeping giant.
Enter Babylon Genesis
On April 10, 2025, Babylon Genesis (BABY, Not Yet Rated) launched with an ambitious proposition …
Allow Bitcoin holders to stake their BTC natively on the Bitcoin network to earn yield … all while maintaining self-custody.
No wrapping, no bridging, no third-party custody risk.
Sounds unbelievable. But it isn’t.
As the first Layer-1 blockchain secured by native Bitcoin staking, Babylon enables BTC holders to put their dormant bitcoin to work without sacrificing security or custody.
It's a significant innovation for an asset class that has historically resisted yield-generation mechanisms that don't involve counterparty risk.
How It Works
Babylon Genesis is built on the Cosmos SDK — an open-source framework for building multi-asset public PoS blockchains. These are generally referred to as application-specific blockchains. But Babylon Genisis is unique among these. That’s because it’s secured by Bitcoin through a dual staking model.
This set up allows BTC holders to stake their native BTC by locking their tokens into a special staking contract on the Bitcoin blockchain itself.
Your BTC remains under your control in a time-locked output, and you can request to unbond at any time (with a waiting period).
In parallel, Babylon runs a traditional proof-of-stake consensus with its native BABY token.
The beauty here is how simple this is for the user: BTC holders register their tokens via a Babylon transaction, then delegate them to a listed finality provider.
After a waiting period (around 30 Bitcoin blocks), rewards start accruing.
Those rewards come in the form of BABY tokens, and stakers can anticipate a baseline yield of about 4% APY.
This may not sound revolutionary to veterans who target DeFi’s incredibly high-yield pools.
But in the Bitcoin ecosystem, a trustless 4% yield is nothing to sneeze at.
Early Adoption Signals
One month after launch, Babylon is showing remarkable traction:
- Approximately 50,000 BTC (around $1.5 billion) are actively staked through Babylon
- Over 10,000 unique BTC addresses have participated in staking
- There are over 250 registered finality providers, including industry heavyweights like Galaxy Digital, Figment and P2P.org
For context, 0.25% of all circulating Bitcoin was put into Babylon within weeks.
That’s an astonishing figure for a brand-new protocol.
Why Investors Should Pay Attention
Babylon’s benefits for BTC holders are evident. But there are three key reasons investors should pay attention, too.
1. A New Paradigm for BTC Yield
The crypto landscape is littered with the corpses of centralized lending platforms that promised sustainable BTC yields before imploding spectacularly.
BlockFi alone had over $10 billion in crypto deposits by early 2021 … before the industry-wide collapse revealed the risks of rehypothecation and opaque lending practices.
But Babylon's approach is fundamentally different. Its yields are on-chain and transparent, governed by protocol rules rather than a black-box lending desk.
And there's no counterparty risk of default. (Though there are still risks, which I’ll cover in just a moment.)
2. Shared Security: The Strategic Play
Babylon isn't just a staking service. It's a shared security protocol that can be used to strengthen other blockchains.
Phase 3 (targeted for late 2025) is where Babylon's vision expands dramatically. The protocol will enable Bitcoin restaking, meaning one BTC locked can simultaneously secure multiple networks.
This could multiply the yield potential for BTC stakers as they’ll earn not just BABY but rewards from other protocols as well.
Another Phase 3 goal is adding EVM support on Babylon, which could enable Ethereum-native dApps to deploy on Babylon and tap into native BTC liquidity.
Babylon calls any chain that adopts its protocol a Bitcoin Secured Network (BSN). These could be new Layer-1s, Cosmos zones, Ethereum (ETH, “B+”) Layer-2 rollups or even dApps that want extra security.
See, the PoS chains that integrate Babylon gain the peace of mind that their history is etched into Bitcoin's blockchain, which reduces risk of deep reorgs or 51% attacks.
This positions Babylon as a potential "Bitcoin-backed security cloud" for web3.
In short, multiple PoS networks can gain access to Bitcoin’s security and liquidity … all while BTC holders earn yield by securing multiple networks.
3. The BABY Value Proposition
As the native currency of the Babylon Genesis chain, BABY is used for gas fees, governance and staking.
Its value proposition is straightforward: It captures a share of all the economic activity Babylon enables.
Not only that, but you can also earn yield by staking BABY on Babylon.
Other chains that use Babylon's security will pay fees or a cut of their staking rewards to Babylon. Per design, those fees flow to BABY stakers and BTC stakers.
In essence, BABY holders could earn "dividends" from multiple networks' rewards. That’s something few Layer-1 tokens offer.
In short, there are three ways investors can benefit from Babylon:
- Native BTC Staking: Generate yield without sacrificing security or custody.
- Capital Gains via BABY: Gain leveraged exposure to Babylon's growth and future revenue streams.
- Ecosystem Plays: Investors can also target projects building on Babylon (LST providers, DeFi protocols)
The Risk Equation
As with any crypto investment, there are risks involved with Babylon.
The main ones you should be aware of are …
- Technical Risk: As a brand-new protocol handling significant value, bugs or exploits could damage both funds and reputation.
- Slashing Risk: If a finality provider misbehaves, both their BABY stake and your delegated BTC stake can be slashed as a penalty. That means you’ll have to choose your provider wisely.
- Adoption Risk: If Babylon fails to onboard external chains in its planned Phase 3, the value proposition diminishes significantly.
- Token Inflation: BABY has an ongoing inflation of 8% annually. If network usage and revenue don't grow faster, this could pressure the token price.
Final Thoughts
Babylon Genesis finally addresses a long-standing inefficiency in crypto: How to make your BTC work harder for you … without selling.
With $1.5 billion already staked and major players integrating the protocol, it's a trend worth watching.
While nothing is guaranteed, its early traction suggests Babylon has identified a genuine market need.
For the Bitcoin maximalist in your life who's skeptical of DeFi, Babylon might just be the bridge that changes their mind.
Sometimes the most powerful innovations aren't the flashiest, they're just the ones that unlock value from what was already there.
Best,
Jurica Dujmovic
