Babylon Labs and Lombard Protocol are collaborating to introduce liquid Bitcoin staking on Sui, a rapidly growing layer-1 blockchain network. The announcement, made on November 25, outlines plans for Bitcoin holders to begin staking their BTC on Babylon, a Bitcoin layer-2 network, starting in December. This will allow users to mint LBTC, Lombard’s liquid staking token (LST).
The initiative is designed to integrate Bitcoin liquidity into Sui’s decentralized finance (DeFi) ecosystem. By using LBTC as a collateral asset, the project aims to empower Bitcoin holders to leverage their assets for lending, borrowing, and trading on Sui. This move is expected to unlock Bitcoin’s significant $1.8 trillion liquidity potential within the Sui ecosystem, according to the announcement.
Expanding Sui’s DeFi Potential
LBTC is poised to become a cornerstone asset for Sui’s DeFi ecosystem, enabling various financial activities while attracting more Bitcoin liquidity to the platform. To support this effort, Cubist, a blockchain development firm, will create the necessary infrastructure for BTC deposits, staking, minting, and bridging to Sui.
“Bitcoin’s enormous $1.8 trillion market capitalization represents an untapped reservoir of potential,” noted Jacob Phillips, co-founder of Lombard Protocol. He added that this initiative aims to allow Bitcoin holders to fully engage in next-generation on-chain finance while maintaining security and liquidity.
A New Era for Bitcoin and Sui
Since its 2023 launch, Sui has established itself as a key player in the blockchain space, amassing around $1.4 billion in total value locked (TVL), as reported by DeFiLlama. Often referred to as a “Solana killer,” Sui has gained a reputation for its support of high-performance decentralized applications (dApps).
Bitcoin liquid staking tokens (LSTs) are growing in popularity, with a combined TVL of approximately $4.5 billion, according to data from StakingRewards.com. Among Bitcoin LSTs, SolvBTC leads with around $1.5 billion in TVL, while Lombard’s LBTC ranks second with $1 billion.
Unlocking New Opportunities for Bitcoin
Liquid staking for Bitcoin mirrors staking mechanisms on proof-of-stake (PoS) networks like Ethereum. Stakers lock their BTC as collateral on Bitcoin layer-2 networks, such as Babylon and CoreChain, earning rewards in return. While Lombard’s LBTC is the largest LST on Babylon, the network has not yet begun distributing staking rewards. Other LSTs, like SolvBTC, already generate returns, with an annual percentage rate (APR) of approximately 1.2%.
The competition for Bitcoin liquidity is heating up. Solv Protocol, for instance, recently launched a Bitcoin LST on Solana, aiming to attract BTC holders as yield-earning opportunities for the asset continue to expand. This growing trend underscores the demand for innovative solutions that bridge Bitcoin with emerging blockchain ecosystems.
For more news, find me on Twitter Giannis Andreou and subscribe to My channels Youtube and Rumble
What is your opinion on this particular topic? Leave us your comment below! We are always interested in your opinion!
