Babylon Protocol and Pell Network: New Ways to Earn Passive Income with Bitcoin (BTC) Staking

In August 2024, the launch of Babylon Protocol introduced the possibility to stake Bitcoin (BTC) and earn passive income from it

The launch of Babylon Protocol in August 2024 opened up new avenues for earning passive income from Bitcoin (BTC) while maintaining self-custody security. Now, protocols like the Pell Network are adding another layer of liquidity with the introduction of Bitcoin restaking in an omnichain approach.

Finbold has also covered other methods for investors to generate passive income with crypto, including exposure to the U.S. dollar. We have also reported on Cardano’s integration of Bitcoin into its decentralized finance (DeFi) ecosystem, unlocking possibilities for BTC staking.

Pioneering Bitcoin staking: How Babylon Protocol enables passive income

Interestingly, Babylon’s approach to BTC staking is gaining popularity by leveraging the programmable features of the Bitcoin blockchain. The protocol utilizes Bitcoin timestamps to lock BTC units in a self-custody wallet with two potential triggers.

Either (1) unlocking the Bitcoin in three days in case of an honest unstaking, or (2) sending the BTC to a burn address in case of a malicious behavior, following slashing rules, which are common in proof-of-stake (PoS) blockchains.

With this, developers can create blockchains that have their economic security attached to BTC and not a newly created token. This has the potential to increase the security of such networks, while also allowing Bitcoin holders to capitalize through rewards from these blockchains, generating passive income.

At the time of writing, Babylon has nearly $6 billion worth of 56,720 BTC locked in its BTC staking protocol.

BTC liquid staking protocols and restaking explained with Pell Network

Building on top of that, there are liquid staking protocols such as Lombard, Solv Protocol, PumpBTC, Lorenzo, and Bedrock. Liquid staking became popular with Lido, on Ethereum (ETH), through the stETH liquid staking derivative (LSD) token.

Now, this is possible thanks to the growing Bitcoin finance (BTCFi) ecosystem, where liquid stakers receive LSDs like stBTC and LBTC. All of that is built on top of the Babylon staking protocol, allowing investors to use these BTC liquid-staked tokens for further financial applications, besides only earning passive income from the staking base layer.

Among the possible applications, we find the Pell Network, the first Bitcoin restaking protocol with a presence in over 18 blockchains (omnichain). In essence, restaking allows users to stake their LSDs, a concept popularized by Eigenlayer for ETH liquid staking.

The Pell Network enables blockchain services such as oracles, bridges, and RPC nodes to use these liquid staking derivatives to validate their networks. In turn, this system generates yield and passive income for the liquid-staked Bitcoin token holders through these services.

Pell Network’s PELL token on xLaunchpad for Bitcoin restaking and passive income

In this context, the Pell Network is set to launch its native token, PELL, through public sales, following a successful $3 million-private fundraising pre-seed round. Among the over 18 supported blockchains, the team has chosen MultiversX (EGLD) for PELL’s initial DEX offering (IDO) via the xLaunchpad platform.

There will be 63 million PELL for sale at $0.0238 per token, aiming to raise $1.5 million through xLaunchpad. On that note, Finbold’s editor, Vinicius Barbosa, covered Bitcoin restaking and PELL’s launch in a deep-dive video and post.

Pell Network @ xLaunchBTC and EGLD ReStaking Easily Explained@Pell_Network is coming to the @MultiversX blockchain, launching its $PELL token as an ESDT, via the @xLaunchpad platform.Sounds on! 🔊Here, we will dive into what the Pell Network is, how BTC and… pic.twitter.com/hURiOMmGzO

In addition to launching PELL on MultiversX, the Pell Network will also introduce the first EGLD restaking protocol, expanding its potential use cases.

Having said that, it’s crucial to note that earning passive income through Bitcoin staking and restaking does come with risks. Besides the slashing mechanisms, each protocol has its own set of potential vulnerabilities that investors must be aware of. Furthermore, participating in PELL’s token launch is a speculative play, betting in the unpredictable success of Pell Network.

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