In August 2024, the launch of Babylon Protocol introduced the possibility to stake Bitcoin (BTC) and earn passive income from it while maintaining the self-custody security standard. Now, protocols like the Pell Network create another liquidity layer, introducing Bitcoin restaking in an omnichain approach.
Finbold has also covered other ways investors can earn passive income with crypto, even getting rewarding exposure to the U.S. dollar. We have also reported on how Cardano is integrating Bitcoin natively to its decentralized finance ecosystem (DeFi), unlocking some doors to BTC staking.
Passive income with Bitcoin staking via Babylon Protocol
Interestingly, Babylon is gaining popularity thanks to its novel approach to BTC staking using programmable features of the Bitcoin blockchain. The protocol leverages Bitcoin timestamps to lock BTC units in a self-custody wallet under 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 very common in proof-of-stake (PoS) blockchains.
With that, developers can now create blockchains with their economic security attached to BTC and not a recently created token. This potentially increases the security of such networks, while also allowing Bitcoin holders to capitalize through rewards from these blockchains, generating passive income.
As of this writing, Babylon has nearly $6 billion worth of 56,720 BTC locked in its BTC staking protocol.
Babylon Protocol, Bitcoin staking dashboard. Source: Babylon / Finbold
BTC liquid staking protocols and restaking via Pell Network
Building on top of that, there are liquid staking protocols such as Lombard, Solv Protocol, PumpBTC, Lorenzo, and Bedrock. Liquid staking become popular with Lido, on Ethereum (ETH), through the stETH liquid staking derivative (LSD) token.
This is now possible to the growing Bitcoin finance (BTCFi) ecosystem, when liquid stakers receive LSDs like stBTC and LBTC. All that 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 application, enters Pell Network, the first Bitcoin restaking protocol with presence in over 18 blockchain (omnichain). Essentially, the restaking allows users to stake their LSDs and is a concept popularized by Ethereum’s Eigenlayer, for ETH liquid staking.
The Pell Network allows blockchain services such as oracles, bridges, and RPC nodes to use these liquid staking derivatives to validate their networks. Meanwhile, 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, Pell Network is ready to launch its native token, PELL, via public sales, after a successful $3 million-private fundraising pre-seed round. Within all 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, potentially raising $1.5 million via xLaunchpad. On that note, Finbold’s editor, Vinicius Barbosa, published a deep-dive video and post tackling Bitcoin restaking and PELL’s launch.
Besides launching PELL on MultiversX, the Pell Network will also offer the first EGLD restaking protocol, potentially increasing its uses.
All that said, it is important to understand that earning passive income with Bitcoin staking and restaking comes with risks. Besides the slashing mechanisms, each protocol has its own set of potential vulnerabilities that investors must be aware of. Moreover, participating in PELL’s token launch is a speculative play, betting in the unpredictable success of Pell Network.
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