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Babylon Genesis Stakers Overview

Babylon Genesis implements a dual-staking model that combines the security of BTC (a PoW asset) with the efficiency of Proof-of-Stake consensus. This innovative approach allows both BTC holders and BABY token holders to participate in securing the network while earning rewards.

Quick Start​

BTC Staking Guide
Learn how to stake Bitcoin on Babylon
BABY Staking Guide
Learn how to stake BABY tokens
Co-Staking Guide
Maximize rewards by staking both BTC and BABY

Two Staking Mechanisms​

1. Bitcoin (BTC) Staking​

BTC staking enables Bitcoin holders to stake their assets directly on the Bitcoin network in a self-custodial manner without wrapping or bridging. BTC stakers delegate to Finality Providers who enhance the security of the Proof-of-Stake chain.

Key Features:​

  • Self-custodial: Maintain direct control of your Bitcoin
  • Native operation: No wrapped tokens or bridges required
  • Trustless execution: No reliance on third parties
  • Slashing capability: Protocol-enforced penalties for malicious behavior
  • Multi-staking: Delegate across multiple Finality Providers and BSNs

Benefits:​

  • Earn BABY rewards: Receive a portion of the annual inflation allocated to BTC stakers (1% of annual inflation)
  • Co-staking rewards: Earn additional 2.35% annual inflation by also staking BABY tokens (see Co-Staking below)
  • Secure the network: Contribute to Babylon Genesis chain's security
  • Maintain Bitcoin ownership: Your BTC remains on the Bitcoin blockchain
  • Fast unbonding: ~2 days compared to typical 21 days in most PoS chains

2. BABY Token Staking​

BABY staking is a native staking mechanism that secures the Babylon Genesis chain. BABY token holders delegate to chain validators to accrue inflationary rewards proportional to their stake.

Key Features:​

  • Epoch-based staking: Delayed execution queue for enhanced security
  • Fast unbonding: ~2 days via Bitcoin timestamping protocol
  • Governance participation: Voting power in chain governance
  • Partial slashing: 5% slashing for double-signing violations

Benefits:​

  • Earn rewards: Receive a portion of the annual inflation allocated to BABY stakers (2% of annual inflation)
  • Co-staking rewards: Earn additional 2.35% annual inflation by also staking BTC (see Co-Staking below)
  • Secure the network: Contribute to the Babylon Genesis chain's security and decentralization
  • Governance rights: Participate in shaping the future of the network
  • Fast unbonding: Significantly reduced unbonding period

How They Work Together​

The dual-staking model creates a robust security framework:

Security Model​

  • BTC stakers delegate to Finality Providers who enhance PoS security
  • BABY stakers delegate to validators who oversee block production and consensus
  • Both mechanisms contribute to securing the Babylon Genesis chain

Reward Distribution​

The annual inflation (5.5%, reduced from 8%) is distributed among:

  • BTC stakers: 1% of annual inflation (Finality Providers can charge commission)
  • BABY stakers: 2% of annual inflation (CometBFT validators can charge commission)
  • Co-staking rewards: 2.35% of annual inflation (for users staking both BTC and BABY)
  • Finality Provider compensation: 0.075% of annual inflation (based on delegation size)
  • Validator compensation: 0.075% of annual inflation (based on delegation size)

Governance​

  • BABY stakers participate in governance with voting power
  • BTC stakers do not participate in governance but receive rewards

Risk Considerations​

BTC Staking Risks​

  • Slashing risk: 0.1% maximum penalty for protocol violations
  • Finality Provider risk: Choose reliable Finality Providers
  • Market volatility: BTC price fluctuations affect staking value

BABY Staking Risks​

  • Slashing risk: 5% penalty for validator double-signing
  • Validator risk: Choose reliable validators with good track records
  • Market volatility: BABY price fluctuations affect staking value

Co-Staking​

Co-staking is a powerful feature that allows you to earn additional rewards by staking both Bitcoin (BTC) and BABY tokens simultaneously using the same BABY address.

What is Co-Staking?​

When you stake both BTC to Finality Providers and BABY to CometBFT validators using the same BABY address, you become eligible for co-staking rewards. These rewards come from a dedicated pool representing 2.35% of annual inflation, distributed proportionally among all co-stakers.

How Co-Staking Works​

Co-staking rewards are calculated based on a weighted formula:

w = min(B_BABY / 20,000, B_BTC)

Where:

  • B_BABY = Total amount of BABY you have staked (across all validators)
  • B_BTC = Total amount of BTC you have staked to active Finality Providers
  • R = Co-staking factor = 20,000

Key Points:

  • Every 20,000 BABY staked makes 1 BTC eligible for co-staking rewards
  • All your BABY delegations are summed together, regardless of how many validators you delegate to
  • The optimal ratio is 20,000 BABY per 1 BTC to maximize rewards
  • Any amount of BTC and BABY will earn rewards proportionally - there's no minimum threshold

Example​

Alice has:

  • 1 BTC staked to a Finality Provider
  • 20,000 BABY staked to validators (could be split across multiple validators)

Co-staking weight: min(20,000 / 20,000, 1) = 1.0 BTC-equivalent ✅

Alice earns co-staking rewards proportional to her 1.0 BTC-equivalent weight.

Important Requirements​

⚠️ CRITICAL: Both BTC and BABY staking must use the exact same BABY address. If the addresses differ, you will receive ZERO co-staking rewards.

Withdrawing Co-Staking Rewards​

Co-staking rewards are automatically included when you withdraw BTC staking rewards. Simply click the "Withdraw" button in the BTC Staking section of the dashboard, and both BTC staking rewards and co-staking rewards will be withdrawn together in one transaction.

For a complete guide on co-staking, including step-by-step instructions and a reward calculator, see the Co-Staking Guide.

Advanced Features​

Fast Unbonding​

Both BTC and BABY staking benefit from Babylon's Bitcoin Timestamping protocol:

  • ~2 days unbonding vs typical 21 days
  • Bitcoin checkpoint verification ensures security
  • Automatic token release once confirmations are met

Multi-Staking (BTC)​

BTC stakers can delegate across multiple Finality Providers and BSNs simultaneously:

  • Diversify risk across multiple networks
  • Maximize rewards from multiple sources
  • Maintain security isolation between networks

Next Steps​

This dual-staking model represents the foundation of Babylon's Bitcoin Secured Network, combining the robustness of Bitcoin with the efficiency of Proof of Stake consensus to create a secure, decentralized, and rewarding staking ecosystem.