Bitcoin DeFi TVL Doubles in a Month Fueled by Babylon Staking Platform

The Bitcoin decentralized finance (BTCFi) ecosystem exploded last month, with its total value locked (TVL) more than doubling to $7.5 billion.

The growth was driven by the Bitcoin staking protocol Babylon opening up its third round of deposits from Dec. 10 to Dec. 17. $3.8 billion of the $4 billion added to BTCFi TVL that week came from Babylon, according to DeFiLlama.

Almost 110,000 Bitcoin holders rushed to stake their tokens on Babylon, which takes a new approach to staking Bitcoin to secure other proof-of-stake blockchains.

For one thing, the staked Bitcoin never leaves the user’s custody. Babylon locks staked BTC on the Bitcoin blockchain without using bridges, wrappers or third-party custody, which can put users in danger from hacks and thefts.

Instead, it allows proof-of-stake blockchains, layer-2s and Dapps to piggyback on Bitcoin’s security by using its timestamping protocol to timestamp events on other chains onto Bitcoin.

TVL Up 2,000%

The Bitcoin staking sector as a whole jumped to $6.5 billion at the end of 2024 from $307 million on Jan. 1, having retreated somewhat as BTC retraced from its $108,135 all-time high on Dec. 17. Bitcoin staking’s TVL stood at $7.25 billion on Jan. 16, according to DeFiLlama.

Certainly, part of that growth can be attributed to the soaring value of Bitcoin in the past three months. But Bitcoin cracking six figures can’t account for the more than 2,000% increase that Binance Research found.

“This exponential increase was largely attributed to the Bitcoin staking and re-staking platform Babylon, which accounts for more than 80% of the total Bitcoin DeFi locked volume,” Binance Research said.

Babylon has only accepted Bitcoin three times, largely in the last two staking rounds. The first one, in August, was small, limited to 1000 BTC at a maximum stake of 0.05 BTC, Babylon said in its 2024 annual review.

Round two, on Oct. 8, saw 22,891 BTC staked by 12,590 participants, roughly the same number that participated in the first round.

Round three, from Dec. 10 to Dec. 17, saw 33,399 BTC staked by almost 110,000 participants.

Participation has likely been spurred on by a Babylon points program, which participants expect to be used in an airdrop at some point.