Nomic, a bitcoin sidechain, is set to launch a bitcoin liquid staking token within the Cosmos ecosystem through a collaboration with Babylon, a BTC staking protocol.
Nomic’s bitcoin liquid staking token aims to help bitcoin DeFi applications compete with Ethereum’s DeFi ecosystem.
(Unsplash/Brian Wangenheim)
Posted April 10, 2024 at 1:00 am EST.
Nomic, the layer 1 blockchain behind a non-custodial bitcoin bridge, is betting on a surge in interest around bitcoin liquid staking solutions.
Nomic on Wednesday said it plans to roll out a bitcoin (BTC) liquid staking token within the Cosmos ecosystem via an integration with Babylon, a staking protocol on the Bitcoin network.
Liquid staking tokens (LSTs) through Tuesday commanded about $54 billion of total value locked (TVL) — good for the top spot among DeFi applications, according to DeFiLlama data. Investors have been attracted to the possibilities of earning staking yield and dabbling in DeFi protocols at the same time.
Read more: How Liquid Staking Works
Cosmos users will be able to stake their BTC through Nomic’s bridge to earn yield and retain liquidity of their staked assets. Typically, staking BTC locks the asset for a specified time frame.
Nomic’s arrangement presents a loophole of sorts, allowing users to tap their staked BTC for deployment in decentralized finance (DeFi) protocols that are compatible with Cosmos’ inter-blockchain communications (IBC) technology protocol.
Cosmos’ IBC protocol enables different blockchains within the Cosmos ecosystem to communicate with each other. One example: executing a transfer between blockchains via IBC.
The Nomic setup is designed, according to a Tuesday statement, so that stakers of BTC on Nomic will earn rewards dominated in Nomic’s native token, NOM, and nBTC, an IBC-compatible token issued by Nomic that represents 1-to-1 ownership of BTC.
In addition to offering BTC holders a different yield stream, stBTC, as well as staked NOM, will secure Nomic’s layer 1 blockchain.
“With innovations like stBTC emerging, Bitcoin DeFi now has the potential to compete with the trading volumes and total value locked of Ethereum DeFi,” said Matt Bell, CEO of Turbofish, Nomic’s founders and core contributors, in a statement.
Nomic has not released stBTC on mainnet, with users only able to experiment with the functionality of the BTC liquid staking token on Nomic’s test network, the statement said.
