Introduction
The Babylon project focuses on developing security protocols to leverage Bitcoin's capabilities for enhancing security across the decentralized ecosystem. It utilises three core aspects of Bitcoin: the asset itself, its Proof-of-Work (PoW)-secured timestamping function, and its highly censorship-resistant blockspace. The project's goal is to create protocols that make a decentralised world more secure and integrated with Bitcoin's infrastructure.
Babylon's offerings include a suite of Bitcoin security-sharing protocols, currently featuring two key protocols:
- Bitcoin Timestamping: This enables the creation of succinct and verifiable timestamps for any data, such as PoS blockchain information, directly on Bitcoin.
- Bitcoin Staking: This allows the use of Bitcoin assets to economically secure decentralised systems through a trustless and self-custodial staking process.
Yesterday it was announced that Binance Labs invested an undisclosed amount in the protocol. Babylon has previously secured $18 million in Series A funding in December 2023 in addition to an initial seed funding round of $8.8 million in 2022. The project is scheduled to be live closer to the Bitcoin halving.
Babylons Bitcoin timestamping protocol:
Babylon's Bitcoin timestamping protocol enables the acquisition of Bitcoin timestamps for any data submitted to it. The immutability and security of these timestamps improve over time as more work is added to the Bitcoin blockchain. This protocol is particularly useful for enhancing the integrity and security of Proof-of-Stake (PoS) blockchains, offering protection against long-range attacks. It incorporates Bitcoin for timestamping, the Babylon blockchain for checkpoint aggregation and data availability and PoS blockchains as beneficiaries of this added security.
The enhanced security facilitates various applications:
Fast Unbonding: PoS blockchains typically rely on social consensus to mitigate long-range attacks, resulting in extended unbonding periods. Leveraging Bitcoin's security can reduce these periods to a few hours.
Bootstrapping New Zones: Bitcoin's security can assist in the initial development of new zones with low token valuation.
Protecting Important Transactions: It can safeguard critical transactions, ensuring they are processed swiftly and securely, while regular transactions benefit from rapid finality.
Censorship Resistance: In cases of censorship, Babylon can serve as an alternative means for transactions to be recorded on the ledger.
Foundation for Bitcoin Staking: The timestamping protocol is a crucial component for Babylon's Bitcoin staking protocol, enabling synchronisation between PoS blockchains and Bitcoin.
Furthermore, the protocol allows for the development of custom timestamping services using CosmWasm, with tailored data verification rules.
BTC timestamping enhances PoS chain security by:
Eliminating Weak Subjectivity: Offers objective timestamps, reducing reliance on social consensus.
Reducing Unbonding Time: Shortens stake unbonding from weeks to a day.
Aiding New Chain Growth: Protects low-valuation PoS chains from forking attacks.
Verifying Chain States: Ensures integrity of chain state or snapshots via objective Bitcoin data.
Securing Transactions: Adds a layer of security for important transactions.
Combating Censorship: Offers a workaround for censored transactions in PoS chains.
Direct checkpointing to Bitcoin is challenged by its limited space and high fees. Babylon addresses these issues, providing scalable and secure integration of PoS chains with Bitcoin's security mechanisms.
Babylons Bitcoin staking core design
The Bitcoin staking protocol introduces a slashing mechanism for safety violations using two key concepts: accountable assertions from cryptography and finality gadgets from blockchain consensus. This is achieved through the use of extractable one-time signatures (EOTS), which expose a staker's secret key if they sign two different blocks at the same height. An additional signing round, known as the finality round, is added to the base consensus protocol. A block is only finalised if it garners EOTS signatures from over two-thirds of the Bitcoin stake. Safety violations are essentially reduced to instances of double signing during this round. If a safety violation occurs, it implies that more than one-third of the Bitcoin stake has engaged in double signing, leading to the extraction of those stakers' secret keys. These keys, which can be implemented through Schnorr signatures, allow for the slashing of the staked Bitcoin.
This modular approach is designed to be compatible with various Byzantine Fault Tolerance (BFT) consensus protocols, enabling its application across different Proof of Stake blockchains without necessitating changes to their base protocols.
Babylon’s architecture can be detailed as show below;
The Babylon system integrates a Babylon node developed with the Cosmos SDK, alongside auxiliary programs supporting BTC staking, participation in the finality round, and interoperability between Bitcoin and other Consumer Zones.
Disclaimer: This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.