Bitcoin Staking Protocol Babylon Sees More Than $21M Worth of BTC Unstaked After BABY Token Airdrop

Update April 4, 10:40 am UTC: This article has been updated to insert comments from Bitlayer co-founder Kevin He.

Over 256 Bitcoin (BTC) were unstaked from the Babylon (CRYPTO: BABY) protocol in the 24 hours after the platform’s token airdrop, according to blockchain data shared by a developer.

On Tuesday, Bitfeed developer Mononaut said that in the past 24 hours, 256 Bitcoin had been unstaked from the staking protocol. The unstaking transactions paid 1.35 BTC in fees and consumed 1.318 Megavirtualbytes (MvB) of blockspace. This means the transactions generated high fees and occupied roughly a third of an entire Bitcoin block.

The activity followed Babylon’s 600 million token airdrop of its native token, BABY, which was distributed to early users and contributors.

In a previous interview with Blockware Solutions, Babylon co-founder Fisher Yu said that, unlike Ethereum and Solana, Bitcoin staking does not reward stakers in the chain’s native asset. Instead, they may get rewards in the form of the native token of the blockchain secured by the staked Bitcoin capital.

On Monday, the Babylon Foundation announced the details of the airdrop program for its early adopters. The protocol said the airdrop was dedicated to its Phase 1 stakers, non-fungible token (NFT) holders and developers contributing to its ecosystem.

The staking protocol said it was airdropping 600 million BABY tokens, 6% of its total supply; 30 million BABY were allocated to the protocol’s Pioneer Pass NFT holders, while 5 million BABY were slated for open-source contributors.

The rest of the tokens were to be distributed among eligible stakers who participated in the protocol’s Phase 1. This included a stake participation airdrop of 30 million BABY, a base staking reward airdrop of 335 million BABY and a bonus staking reward airdrop for Phase 2 transition of 200 million BABY.

While the platform distributed an airdrop for its early adopters, it clarified that it did not include wallet campaigns and liquid staking incentives in this airdrop event.

In response to the airdrop, cryptocurrency exchange OKX is listing the BABY token and USDT pair in pre-market futures. Pre-market futures allow traders to speculate on an asset’s future price. This allows investors to trade BABY futures before the asset becomes available in spot markets.

Even though millions in BTC were unstaked after the airdrop, the effect may be minimal. Bitlayer co-founder Kevin He said this was “common short-term market behavior.”

This simply represents early redemption. Furthermore, the high transaction fees stem from Babylon’s initial design and do not impact its long-term value.

Babylon has garnered significant attention for its unique tokenomics and airdrop program, which aims to boost community engagement. The protocol plays a key role in expanding the possibilities of Bitcoin DeFi, pushing the cryptocurrency beyond its role as a store of value.

Data platform DefiLlama shows that Babylon currently has a total value locked (TVL) of $4.29 billion. This represents 80% of the Bitcoin ecosystem’s overall TVL of $5.34 billion.