Babylon, a bitcoin staking protocol under development, has raised $18 million in a Series A funding round co-led by Polychain Capital and Hack VC.
Other investors in the round include Framework Ventures, Polygon MATIC +1.34% Ventures, Castle Island Ventures, OKX Ventures and Symbolic Capital, Babylon said Thursday. The project began raising for the round at the end of July and "just closed it," David Tse, co-founder of Babylon and an engineering professor at Stanford University, told The Block.
It was an equity plus token warrant round — the same structure as Babylon's $8 million seed funding round disclosed in March — Tse said. He declined to comment on Babylon's valuation with the round.
What is Babylon?
The Babylon protocol will allow bitcoin holders to stake their coins on proof-of-stake blockchains and earn yield. The protocol will essentially allow PoS chains to introduce bitcoin as a staking asset on their networks. Babylon aims to use Bitcoin BTC -0.01% 's security to enhance the security of PoS chains.
PoS chains are currently secured by capital from their native tokens. Still, that capital can be costly, especially for emerging chains, as high inflation rates are required to pay high staking yields to attract such capital. The Cosmos Hub ATOM -1.37% community, for instance, recently approved a proposal to reduce the maximum inflation rate of its native token Atom from about 14% to 10%. The approved change would bring Atom's annualized staking yield from approximately 19% to about 13.4%.
Babylon is already in talks to support the Cosmos Hub and Polygon networks, Tse said. "Babylon is becoming a contributor to Polygon CDK [Chain Development Kit ] and the Polygon ecosystem more broadly," Polygon co-founder of Polygon Sandeep Nailwal said in a statement. "Babylon integrating their solution into Polygon's staking hub not only bolsters the security of emerging chains but also addresses inflationary pressures inherent in traditional staking models."
The Babylon protocol is expected to launch "around the next Bitcoin halving," Tse said. The halving is expected to occur in April 2024. Once launched, the Babylon chain protocol will "serve as the control plane" between Bitcoin and PoS chains, Tse said.
With the fresh capital in hand, Babylon looks to expand its current team of about 15 people and grow its ecosystem, Tse added.
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