Bitcoin Staking Litepaper

Abstract

Proof-of-Stake (PoS) chains are secured by capital but capital can be very expensive. Bitcoin is a Proof-of-Work chain but it is also a $600 Billion asset and most of it is idle capital. We propose the concept of Bitcoin staking which allows bitcoin holders to stake their idle bitcoins to increase the security of PoS chains and in the process earn yield. We present a Bitcoin staking protocol which allows bitcoin holders to trustlessly stake their bitcoins without bridging them to the PoS chain but yet provides the chain with full slashable security guarantees. The protocol supports fast stake unbonding to maximize the liquidity for bitcoin holders. Moreover, the protocol is designed as a modular plug-in for use on top of many different PoS consensus algorithms and provides a primitive upon which restaking protocols can be built. A system architecture is proposed for scaling the protocol to many stakers and many PoS chains with a Bitcoin-staked Babylon Genesis acting as a control plane to synchronize between Bitcoin and the PoS chains. Bitcoin staking enables an important new use case for Bitcoin and takes a significant step towards integrating Bitcoin and the Proof-of-Stake economy.

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