韭菜复仇记

Chainlink CCIP is now connected—DUSK is no longer an island

I came across a message in mid-August saying that Dusk and Chainlink had connected CCIP, Data Streams, and DataLink together. At the time, I didn’t pay much attention, but when I thought it through carefully, I realized the significance might be underestimated.

Previously, no matter how powerful DUSK was, it was still just a Europe-compliant chain—assets couldn’t leave its own yard. Now with CCIP connected, the NPEX security tokens issued on Dusk can be bridged to more than 60 chains such as Ethereum and Solana, without relying on third-party liquidity pools, and with a burn/mint model that has zero slippage. What does that mean? It means Dusk’s privacy settlement layer could potentially become a “compliant routing hub” for on-chain RWA across the entire ecosystem—issuance on Ethereum, settlement back to Dusk for private PvP/settlement, pricing feeds provided via Chainlink, and cross-chain transfers using CCIP. @Dusk

This is different from those earlier bridges. CCIP doesn’t rely on third-party pools—it uses native burn/mint cross-chain mechanics, without the risk of liquidity pools being drained. If this architecture truly works end to end, then Dusk is no longer just a “Europe-compliant chain,” but a cross-chain privacy settlement layer. This narrative is much bigger than an “NPEX partnership.”

But I looked at on-chain data—after CCIP went live, cross-chain transaction volume hasn’t visibly taken off. DuskEVM’s daily active users are still in the double digits, and the blocks are still mostly empty. The cross-chain channel may be fixed, but the cars haven’t started running yet. For now, I can’t confirm whether this “compliant routing hub” is genuinely being used. Whether the cross-chain route is truly open depends on whether assets actually move over from the other side. Once CCIP’s cross-chain transaction volume starts showing up in on-chain data, I’ll come back to check again. Until then, it’s just a road that’s been repaired but not yet in service.
#dusk $DUSK

Dusk Trade isn’t just an exchange, but when users want to trade, they can’t find counterparties.

Recently, I read an article analyzing Dusk Trade. It said it’s different from most RWA projects—most projects package stocks and bonds, list them, and call it a day. Dusk Trade wants to build a “new type of broker.” It’s the infrastructure layer between investors and assets, handling credential management, settlement, and permissioned disclosure. This isn’t about setting up a marketplace and finishing the job; it’s about moving the entire financial workflow on-chain, embedding compliance logic at the point when assets are issued.
@Dusk

This positioning is indeed a step beyond a mere “exchange.”

But here’s the problem. NPEX holds three licenses—MTF, broker-dealer, and ECSP—while the DLT-TSS is still under review. There are tokenized securities worth over €300 million waiting to be processed. The product positioning targets institutions, yet the campaign is asking retail users to post and earn points. That article raised a question I’ve been thinking about for a long time: if the campaign succeeds, is it because the product genuinely has value—or because the incentives are doing their job?

That line hit me. Dusk Trade is still in its early testing phase, with a waitlist open. The real test isn’t whether they can build the scaffolding. It’s whether, after the €300 million in securities from NPEX is actually on-chain, people truly start trading. Without trading volume, no matter how beautifully the framework is built, it’s still just a framework. One analysis put it very plainly: the boundary of the features on the website is written too vaguely. Institutions entering the market care about what can be used today, not what might be possible tomorrow.

Dusk Trade doesn’t just want to build a trading venue. It wants to build an on-chain channel for the entire regulated financial sector. This direction is right, but the channel is built—yet the trains still haven’t started running. Once NPEX’s €300 million actually begins to move on-chain, and once you see real, sizable orders showing up on Dusk Trade’s order book, then I’ll be able to judge whether this “scaffolding” can truly hold up. Right now, it feels more like a mall with a framework built, but still waiting for tenants.

#dusk $DUSK

Dusk’s entire technology roadmap hits the right ideas, but the market hasn’t bought in

I dug through Dusk’s technology roadmap—ZK privacy, EVM compatibility, a compliance framework, an RWA narrative, an MTF license, and an NPEX partnership. Almost every direction it touches is tied to one of the hottest narratives in the industry right now. The privacy track commands high valuations, the RWA track is hot, and the compliance infrastructure track’s institutional attention is also rising. Dusk essentially has every tag, so, in theory, the market should grant it a solid premium.

But looking at the price and on-chain data, it’s clear the market isn’t paying for it. The market cap is under 30 million, and since its early-year peak, DUSK has fallen significantly. Daily trading volume sometimes drops to dozens of millions of dollars. With a roadmap this complete, the valuation the market is giving it looks more like a test chain still in its validation phase. That makes me keep coming back to one question: is the technology roadmap wrong, or is the market’s pricing logic different from the roadmap?

Where is the problem? One possibility is that the market’s valuation logic for the entire “compliance privacy public chain” category has shifted off course. Dusk is indeed easier to get regulators to accept than other privacy projects, but that advantage isn’t reflected as a corresponding premium in the current token price. People may *need* “compliance privacy,” but people being willing to *pay* for it is a different story. The market is waiting for a confirmation signal—confirmation that real users will use this chain, confirmation that real money will flow through it, confirmation that this chain isn’t just “compliant,” but a chain that is genuinely needed. @Dusk

Another problem is that Dusk’s peer positioning is blurry. Who exactly is it trying to compete with? If it’s aiming at a Layer 1 chain, its gap in TVL and daily active users versus mainstream chains is too large. If it’s targeting the RWA track, it hasn’t yet reached a big enough on-chain asset scale. This ambiguity makes it hard for the market to price it. It’s neither like a fully decentralized privacy coin, nor like a pure compliance-focused financial chain. Stuck in the middle, neither side is willing to give it a high valuation. The market doesn’t like things stuck in the middle. It needs to know what you are in order to decide what price to give you.

Dusk’s technology roadmap does hit the right points, but the market hasn’t yet agreed to pay for that “rightness.” If one day the market truly starts to reprice the “compliance privacy” narrative, Dusk will likely be among the first beneficiaries. But when will that day come? Nobody knows. #dusk $DUSK

Dusk’s roadmap—when I looked through it, I found that some milestones have already passed.

I reviewed Dusk’s roadmap and compared several key time points. The mainnet went live in April 2024, the DuskEVM testnet is scheduled for Q3 2025, and the DuskEVM mainnet for January 2026. These have all been delivered.

But when I keep going further, some milestones start to not match up.

NPEX’s €300 million securities are being tokenized on-chain; on the roadmap, this corresponds to “Q2 2026.” Now Q3 is almost over. The securities are indeed being advanced by NPEX, but they haven’t really started running at scale. EURQ launched, but there’s still no way to see on-chain transaction volume or adoption data. On the Dusk Trade platform, the roadmap says “H1 2026,” and it’s still in waitlist status. @Dusk

Some analysis articles mention that the real watershed is Dusk’s transition from a “speculative roadmap” to a “functional institutional settlement layer.” How fast that transition happens depends on real on-chain transaction volume. This transition hasn’t been completed yet. Even more painful: the tokenomics depend on settlement volume, not collateral. To pay gas for a €50 million bond, the gas fee is only a few cents—so you need enormous transaction volume to absorb the emission of 500 million DUSK.

A project’s roadmap delivery speed often affects market confidence more than the technology itself. Dusk’s technology is definitely progressing, but the few key milestones written on the roadmap are already past their expected timelines. If NPEX’s securities tokenization is delayed by another year, the time for Dusk to go from “technology is ready” to “real assets are actually running” could take three years. The direction is fine, but the pace is the problem.

I’m not saying Dusk can’t deliver. But if a project keeps postponing key milestones on its roadmap, the market’s patience is limited. Once NPEX’s securities truly start running at scale, I’ll come back and reassess the project. Until then, it’s a chain with solid technology, but commercial adoption is still waiting in line. #dusk $DUSK

The DuskEVM developer experience at dusk— I ran through it and found the toolchain is still broken

It’s been half a year since the DuskEVM mainnet went live. The official line has always been: “Solidity developers can deploy seamlessly.” I decided to try it myself and see what level of developer experience this chain really delivers.

The documentation is fairly complete, but after finishing the tutorial, I started looking for familiar things. In the wallet list, there are no commonly used plugin wallets—how do you connect with MetaMask? I searched for a long time and found something like “Configure custom RPC,” but after filling it in, the DUSK balance doesn’t show up in the wallet. I asked around in the community, and someone replied, “Use the CLI wallet.” I went silent. In 2026, for an L1 chain, I have to open the command line just to check a balance. @Dusk

Next is the block explorer. Ethereum has Etherscan—almost every transaction’s status, logs, and token transfers can be tracked. Dusk’s explorer can also show things, but many fields display “pending parsing.” I want to see the actual gas consumption of a Hedger transaction, but I can’t find it. I also want to know whether private data from internal contract calls successfully made it on-chain, but there’s no way to view that either. The tools available to developers are still a half-finished set. The debugging toolchain is weaker too: after a contract error, reproducing it requires manually constructing and replaying the transaction—there’s no ready-made development network, no stable testnet faucet version, and no one-click simulation execution.

These aren’t “higher-level features.” They’re the minimum prerequisites for developers to work normally on a chain. Dusk has put a lot of effort into privacy and compliance, but the tooling issues that developers face every day end up being the biggest time sink. A smart contract developer steps into Dusk and discovers its privacy protection is better than most chains—but also finds that a task that’s simple elsewhere has to be broken into three steps here.

This isn’t a problem with the technical roadmap. It’s a question of developer-experience priorities. Only when I can see my DUSK balance directly in my wallet, find complete transaction logs in the explorer, and reproduce the contract execution process in the debugging tools, will I feel like this chain is truly ready. Until then, it’s still a chain with solid tech that just needs more polishing on the developer experience.

#dusk $DUSK

Dusk’s “sovereign compliance”—whose sovereignty, whose compliance?

Dusk positions itself as a “privacy chain regulated by oversight authorities.” The idea is: you can conduct privacy transactions, but regulators have the authority to inspect them. In the mechanism design, this power is delegated to “sovereign nodes”—held by compliance nodes that possess audit keys. When the regulator requests access, the node decrypts and provides the data. It sounds like it resolves the classic contradiction between “privacy vs. compliance.”

But I have a question: who decides who these “sovereign nodes” are? What are the selection criteria for sovereign nodes? If a sovereign node is attacked and the keys are leaked, does that mean the full transaction history of all users is exposed?

I read through Dusk’s documentation. Sovereign nodes are reviewed and appointed by the Dusk Foundation. The review criteria are “compliance and technical capability”—but it doesn’t specify detailed rules. If a sovereign node is controlled by a particular regulator, or is forced to hand over the keys, how much of users’ privacy remains under the framework of “sovereign compliance”? @Dusk

What concerns me even more is that, technically, this design can indeed achieve “privacy that is auditable”—transactions are hidden, but audit nodes can open them. Yet at its core, you’re not trusting cryptography; you’re trusting that the sovereign nodes won’t misuse their privileges. You’re not trusting mathematics; you’re trusting that institutions won’t do harm.

Dusk’s compliance narrative is certainly compelling in front of institutional clients. “We can put you on-chain while still meeting regulatory requirements”—for financial institutions with ample compliance budgets, that line is definitely valuable. But the prerequisite for “putting you on-chain” is that you must accept that sovereign nodes have the right to view your transactions. You’re an institutional client; you operate in a glass room, and when regulators want to look, they can. So whose privacy is this “privacy,” really—for public privacy or regulatory transparency? That is indeed what Dusk is trying to sell. But “sovereign compliance” itself requires that you trust some authority. In the end, whether this counts as “privacy” or “controlled exposure” depends entirely on which side your perspective is on.
#dusk $DUSK

Dusk’s PLONK vulnerability: a privacy layer with a $600,000 market cap was almost broken through by a forged proof

After I read the security report disclosed by OtterSec on April 30, 2026, I just sat there for about five minutes. The dusk-plonk verifier had never verified the four polynomial commitments provided by the prover. In simple terms, an attacker could forge a fake zero-knowledge proof to mint DUSK tokens and transfer illicit proceeds without any real assets. This is a privacy protocol designed for regulated financial markets, yet its cryptographic core contains a flaw that enables attackers to create tokens out of thin air. This is a foundational infrastructure that claims to give institutions confidence in putting things on-chain—while such a basic defect exists in the privacy layer.

The compliance narrative in the whitepaper looks great, but the code nearly left an infinite minting backdoor. You could say the vulnerability has been fixed. But a vulnerability like this appearing in the validation step of the privacy layer is a slap in the face of the project’s “privacy-first” positioning. A project that makes money from ZK had trouble with its ZK implementation. After reading the report, the first question that popped into my head was—if a privacy chain built on ZK has this kind of bug in its ZK implementation, what else can possibly go right? Dusk’s market cap has already fallen quite a bit from its peak; the $600,000 figure, when translated to the token’s price at the time, means that if the attacker used this vulnerability to mint large amounts of tokens, the price could be directly smashed through. @Dusk

I pulled up a Dusk audit report and skimmed it. The auditor was Dust Labs. The audit scope only covered some modules—was the dusk-plonk verification logic included within that scope? I couldn’t find a clear statement. If the core privacy-layer code was omitted from the audit, or if the audit simply didn’t cover it, then the value of that audit report needs to be reassessed. Audits aren’t something you do once and then you’re done.

I’m not saying Dusk can’t be trusted, but for a project that writes “privacy” into its name, to have such a fundamental vulnerability in the most core ZK verification layer, it’s hard for me to convince myself to keep holding it. Let’s wait until the cryptographic core has gone through a few more rounds of verification. For now, I’m putting it back on my watch list to see whether any new vulnerabilities are disclosed afterward. If the same module breaks again, then it won’t just be a technical problem—it’ll be a process problem. #dusk $DUSK

Babylon is no longer a staking protocol—it’s turning into a secure exchange for Bitcoin

I dug into Babylon’s latest data. The TVL peak hit $7.2 billion, and it’s currently stabilizing above $5.6 billion. More than 56,000 BTC are locked in the protocol and have never left the Bitcoin mainnet. At this scale within DeFi, it already exceeds the TVL of most chains.

What Babylon is really doing is far bigger than “staking and earning.” At its core, it’s building a “secure exchange.” BTC holders rent out their security capital, while PoS chains rent that security to protect their networks. You lock BTC not to collect yield, but to turn your BTC into a layer of security infrastructure and sell it to the chains that need it. One BTC holder provides security; multiple PoS chains buy security; and the Babylon protocol matches them in the middle. This isn’t a staking pool—it’s a bilateral market. @BabylonLabs_io

This market already shows signs of demand. Multiple PoS chains have expressed integration intent, and the supply side of BTC holders is also growing. But the problem is that the price discovery mechanism hasn’t taken shape yet. The rental rate is currently set by the project’s issued BABY tokens, not by the market’s supply-and-demand dynamics. A real security market should have a price discovery mechanism determined by supply and demand. Babylon hasn’t reached that stage yet. Security itself should have a fair price—set jointly by what stakers are willing to accept as rewards and what PoS chains are willing to pay as cost. Right now, the price is still determined by governance parameters, not by a market-driven equilibrium price.

It’s like an exchange that only has sell orders and no buy orders. BTC holders are highly willing to rent out security, but PoS chains that are willing to pay how much for that security have not truly entered the market. Once the demand side starts quoting prices, the price will be discovered for real. Babylon is still in the phase of building out supply, and demand-side order books haven’t truly formed yet.

The direction of turning BTC into a security infrastructure is correct, but it currently feels more like a supermarket priced by the project rather than a free market. Only after the pricing mechanism is truly decentralized and the demand side begins participating in price formation will this narrative fully hold. Until then, it’s still a centrally priced protocol, not a decentralized security market.
#baby $BABY

Babylon’s second round of staking: 23,000 BTC filled within 100 minutes

Babylon’s first round of staking used 1,000 BTC to fill up in 74 minutes, with 12,700 addresses participating. The second round just ended: the data is 23,000 BTC, filled within 100 minutes. Not 1,000—23,000. In 100 minutes, 23 times the BTC amount from the first round was locked into Babylon’s treasury. The growth rate of BTC staked is much faster than most people expected.

More importantly, the participants have changed. In the first round, retail users could still grab a little. In the second round, the per-transaction staking cap was 500 BTC—worth over $30 million at current prices—so retail users simply can’t reach it. The largest staker is Lombard, with 7,166 BTC, accounting for 30% of the total in the second round. Another is Solv Protocol, with 6,009 BTC. Lombard just raised $16 million in July from Polychain Capital. Solv Protocol is a Bitcoin liquidity protocol backed by institutional funds as well. Retail users’ names? Not a single one was seen. @BabylonLabs_io

After Babylon went live on the mainnet, the 1,000 BTC cap was filled within six Bitcoin blocks, and network fees surged from $0.26 to $132 in 90 minutes. When the second round started, a similar fee spike appeared again—but this time it wasn’t because retail users were scrambling. Instead, institutions used scripts to compete with batch bidding. As soon as the staking window opened, transactions flooded in. While retail users were still figuring out how to connect their wallets, the quota had already been swept up by institutions.

Babylon co-founder David Tse previously said, “Looking forward to an exciting moment on the Bitcoin mainnet,” and that moment indeed arrived—but under the spotlight are institutions, not retail users. Babylon’s total staked amount jumped from 1,000 BTC to 23,891 BTC, and TVL surged to more than $1.4 billion. What retail users can see is only changes in on-chain data; they can do nothing themselves. In the first round, you could still say “too slow.” In the second round, you don’t even have the qualification to participate. It’s not that people don’t want to take part—the threshold is no longer within reach for retail.

Babylon’s staking is shifting from a “retail game” to an “institutional game.” What retail users can do is watch the data changes, then continue to hold BTC and do nothing.
#baby $BABY

Babylon’s 12,720 users have built up $5.0B in TVL

I went through Babylon’s latest on-chain data. I’ve confirmed that the staked TVL is 913 BTC, with an additional 454 BTC of staking still pending. The number of users participating in staking has surpassed 12,600. Over twelve hundred people have locked in more than $5 billion worth of BTC.

This number made me think for a while. With 12,600 users staking an average of roughly 4.4 BTC each, at current prices that’s about $350,000. This isn’t retail investors playing around—these are whales. Babylon’s first-stage staking cap was 1,000 BTC, and just six Bitcoin blocks filled it up. Retail investors didn’t even get a chance to compete; the quota was gone. Twelve thousand-plus users sounds like a lot, but against a $5 billion TVL, this user count is actually pitiful. The average stake per user is far above typical DeFi protocols.

What concerns me more is that once the 1,000 BTC limit was filled, the delayed/queued staking amounts had already accumulated to 1,330 BTC. Some people want to stake, but the quota is already full, so they can only queue and wait. Demand is definitely there and strong, but on the supply side, scarcity turns this demand into a game for a small number of people.@BabylonLabs_io

Twelve thousand users supporting $5 billion in TVL shows that Babylon is still, for now, a whales’ playground. Want to get in as a retail user? Wait until the quota opens up. The first-stage cap of 1,000 BTC is indeed far too low—six blocks filled it, and retail couldn’t react in time. No one knows when the second stage will arrive, and the third stage of multi-layer staking is still on the way. Until then, Babylon’s staking remains a whale-only game. What retail users can do is simply watch the quota get snapped up, then keep their BTC in cold storage. Only when the limit expands from 1,000 to 10,000 to 100,000 BTC will retail finally get a chance. At this stage, retail doesn’t even have the right to sit at the table.

#baby $BABY

Babylon’s slashing mechanism: a code bug can burn your BTC forever

Babylon’s most core innovation is its slashing mechanism. Implementing slashing on Bitcoin—something no one had done before. Technically, it’s definitely ahead of its time, but that’s also where the problem lies. In Hindenburg Risk Assessment Report, there’s a line I’ve read several times: “Slashing is enforced cryptographically — an honest software bug can burn your BTC irreversibly.” An honest software bug can burn your BTC permanently. Not a hacker attack, not malicious wrongdoing—your chosen validator’s code has a bug, and by accident it triggers the slashing conditions, and your BTC is gone. Even more terrifying: if multiple validators run the same buggy client, a single bug can simultaneously burn everyone’s BTC. In this system, slashing isn’t “get punished for doing bad things”—it’s “get punished for making mistakes.”@BabylonLabs_io

Babylon uses EOTS (extractable one-time signatures) as the cryptographic foundation for slashing. If a validator double-signs, its private key is exposed, and the attacker can directly take the corresponding BTC. In the paper, this mechanism is beautifully presented—do evil, get punished, a logical closed loop. But in the real world, code bugs, node restart race conditions, network latency, and other factors may cause an honest validator to accidentally trigger double-signing. And in that instant, BTC worth hundreds of millions of dollars is destroyed forever. Bitcoin isn’t Ethereum—there’s no rollback, no governance vote to restore slashed assets. If you’re wrong, you’re wrong; if it burns, it burns. After it’s burned, no one can help you get it back.

There’s currently no real-world, battle-tested precedent for slashing mechanisms. The first deployed slashing system on Bitcoin was the first to manage assets worth tens of billions of dollars, and the first to face real attackers. These three “firsts” stacked together make me not very confident. Babylon’s slashing mechanism may look great in the paper, but between the paper and the mainnet is an entire production line. Until the code is verified, and edge cases are understood and ironed out, I won’t put BTC in. It’s not that I don’t believe the technology—it’s that I don’t trust new weapons that haven’t been tested before going into the real battlefield. Let it actually run smoothly first. When no slashing events have happened yet, that can be the most dangerous time.#baby $BABY

On the Babylon proposal for Aave, I looked into it and found that vaultBTC is a restricted token.

On May 26, Babylon Labs posted a temperature-check proposal in the Aave community, aiming to integrate native Bitcoin as collateral into Aave V4. No wrapping, no cross-chain bridge, no custodian—BTC would be locked in Taproot UTXOs. It sounds like BTC finally has a “clean” use case in DeFi.

I reviewed the technical details of the proposal and found it deploys two Aave V4 Spokes: one handles borrowing and lending, and the other handles liquidation and settlement. The collateral exists in the form of vaultBTC. But vaultBTC is a “transfer-restricted ERC-20 token,” meaning it can only be transferred between fixed whitelisted addresses.

That’s where I paused. A “trustless” BTC lending scheme, yet the collateral token cannot be transferred freely. Users deposit BTC to receive vaultBTC, but they can’t just send it to others—they can only move it between addresses specified by the project. What’s the difference from wrapped BTC? WBTC at least can be transferred freely.

@BabylonLabs_io

I asked someone who has worked on lending and borrowing in DeFi: “How’s the liquidity of a collateral token that can’t be transferred freely?” He said: “There’s no liquidity. If you can’t transfer it, you can’t sell it, can’t do market making, and can’t reuse it in a loop as collateral. It’s just an accounting receipt.”

Babylon’s proposal does address the “cross-chain bridge risk” problem, but it doesn’t solve the “composability” problem. You lock BTC in, and you get back a non-movable receipt. It’s indeed safe—because nobody can touch it. But precisely because nobody can touch it, its usefulness in DeFi is extremely limited.

Also, this Aave proposal is still in the temperature-check phase and is a long way from a full launch. Once it truly runs, I’ll see what kind of liquidity vaultBTC can achieve. For now, it’s just an ERC-20 token with its hands tied.

#baby $BABY

The annualized return from Babylon BTC staking is currently around 1%. The lock-up period ranges from 7 to 90 days. The rewards are paid in BABY.

I looked at this number for a long time. A 1% annualized return, while BTC cannot be moved during the lock-up period. If BTC rises by 5% during that time, your opportunity cost is 4%. If it rises by 10%, your opportunity cost is 9%. BTC’s annualized volatility is 50% or higher. A 5% gain over 7 days isn’t unusual. I asked someone who has held BTC for more than five years: “For a 1% annualized return, would you be willing to lock your BTC for 3 months?” He said: “No. BTC can go up by more than 1% in a single day. If you lock it in, you can’t sell even if it pumps.”

More importantly, the rewards are paid in BABY. If BABY’s price drops during the staking period, your actual return could be negative. How much has BABY fallen from the time it launched? Check the chart yourself. With a 1% annualized return, after subtracting BABY’s depreciation, how much do you actually end up with? Nobody has figured that out. @BabylonLabs_io

Babylon indeed solves the cross-chain bridge problem—no wrapping, no bridging, and you don’t have to hand BTC over to anyone. BTC always stays on the Bitcoin mainnet, and its security is truly a step higher than most BTCFi solutions. But the price of that security is lock-up. You lock your BTC to earn 1% in BABY, while taking the risks of missing out on BTC price increases, the risk of BABY depreciating, and the smart-contract risk if the protocol has issues. Three risks exchanged for a 1% return. I asked someone who runs DeFi strategies: “With that risk-to-reward ratio, do you think it’s worth it?” He said: “Not worth it. A 1% return doesn’t even beat inflation, and you still have to lock it up. Better not to stake.”

A 1% return, no ability to move your funds during the lock-up period, and rewards paid in BABY—those three conditions stacked together make it impossible for the math to work out. Unless you never intended to sell in the first place and you don’t care how far BABY falls. Otherwise, staking is trading a definite lock-up for an uncertain return. After I ran the numbers, I decided to keep my BTC in a cold wallet and not stake. Not staking means at least I won’t lose.

Once the rewards are paid in BTC, the lock-up period is shortened to within a few days, and the BABY price stabilizes, then I’ll come back and recalculate everything. #baby $BABY

Some place launched Babylon staking, but when I checked the terms, I found it’s not self-custody

On July 22, a certain platform launched a Babylon Bitcoin staking service. Users can stake BTC directly on the platform to earn yield via the Babylon protocol, with an annualized return of about 1%. No cross-chain bridge is needed, no wrapping is needed, and the BTC stays on the Bitcoin mainnet.

It sounds like Babylon has finally gone mainstream. But when I reviewed the platform’s terms, I noticed a detail: the staked BTC is held in custody by the platform, and users cannot transfer those BTC during the staking period. The platform runs the Babylon staking flow for you, manages the timelock script on your behalf, and claims BABY rewards for you. You don’t have to do anything—your收益 automatically arrives. But that also means you give up self-custody. Babylon’s core idea is “staking BTC without trusting a third party.” In the platform’s version, trusting a third party is precisely the prerequisite.@BabylonLabs_io

Babylon has long emphasized that it’s different from cross-chain bridge solutions—no bridge, no wrapping, and no handing BTC to anyone. In the platform’s product, the BTC indeed doesn’t leave the Bitcoin mainnet, but the control of the private keys is not in your hands. When you click the “stake” button on the platform, what you’re essentially buying is a centralized custodial product—its underlying layer uses Babylon’s protocol. A 1% annualized return, minus the platform’s cut, means you may end up with even less. You assume Babylon’s protocol risk, the platform’s custody risk, and the risk of BTC price fluctuations, in exchange for less than a 1% return.

I’m not saying the platform’s product is bad. For BTC holders who don’t want to tinker with technical workflows, it’s a convenient entry point. But “convenient” and “self-custody” are two different things. What makes Babylon attractive is self-custody; what the platform is selling is custody. Understanding Babylon using the platform’s version would lead you to misunderstand what this protocol is truly doing. Until you figure that out, I won’t put my BTC into the platform’s staking pool.

#baby $BABY

Babylon doesn’t have its own token, but BTC stakers are still locked up.

When I was reading Babylon’s materials, I found something interesting: Babylon doesn’t issue its own tokens. It doesn’t create tokens, doesn’t do L1, and doesn’t do L2. It’s basically a protocol that lets BTC holders lock their Bitcoin in a timelock script to provide economic security for a PoS chain—and then they receive the rewards. No governance token, no staking token, and no inflation model. @BabylonLabs_io

This is different from EigenLayer’s logic—EigenLayer has an EIGEN token for governance, and re-staked ETH earns yield. Babylon is more like a “Bitcoin security rental market.” You lock your BTC, others rent your BTC security and pay you rent. No intermediate tokens, no additional inflation. In an industry full of tokens, this design is indeed rare.

But the problem is that Babylon’s staking still has a lock-up period. You lock your BTC into a timelock script—how long you’re locked depends on the specific staking pool you participate in. Some are a few weeks, others are a few months. During the lock-up period, your BTC can’t move. You can only watch as the BTC price fluctuates.

I asked a friend who does BTC staking: “How long are you locked for?” He said: “Three months.” I said: “What if BTC goes up during those three months?” He said: “Then you can only watch. Once it’s locked, you can’t take it out.”

Babylon solves the risk of cross-chain bridges, but it doesn’t solve the risk of lock-up. Without bridges, without wrapping, and without third-party custody, the security has indeed taken a step up. But you still have to lock your BTC in, and during the lock-up you still have to bear the opportunity cost of price volatility. A tokenless protocol can still lock your BTC. And this lock is harder to break than tokens. #baby $BABY

The dilemma of a BTC holder

I know an old friend who holds 10 BTC. He’s had them since 2017—he’s been through three bull markets and two bear markets, and he has never sold. A few days ago, we had dinner, and he asked me, “What do you think about Babylon’s BTC staking?”@BabylonLabs_io

I asked him, “Weren’t you never interested in DeFi before? Why suddenly now?” He said, “Because this is BTC that turns into more BTC. Not BTC that turns into some empty air-token. I hold my BTC and don’t sell. There’s no interest every year. If I can safely grow a few percent in additional BTC, why wouldn’t I?” That’s the core demand logic behind Babylon. For someone who has held BTC for more than five years, the only reason to take their coins out of a cold wallet is: “Use the earnings to pay in BTC.” Not BABY. Not any other token. It’s BTC.

Babylon recently partnered with Gomining, which just happens to address this need. BTC holders lock their BTC into Babylon’s vault and receive Gomining’s Bitcoin mining rewards—BTC payback. But the issue is, this collaboration is currently available to only 1,000 BTC. 1,000 BTC—less than 2% of Babylon’s total TVL. Even if my old friend wants to join, he might not get a spot.

He asked me, “Then what should I do now?” I said, “Wait. Wait until the quota expands from 1,000 BTC to 10,000, then 100,000. By then, your BTC can truly start generating more BTC.” After hearing that, he didn’t say anything. He thought for a long time, and finally said, “Then I’ll keep holding.”

I’ve been thinking about what his “keep holding” really meant ever since. He wasn’t unwilling to participate—he simply wasn’t at the threshold level required to participate. The narrative of BTC turning into BTC is correct, but only when it’s truly open to everyday people does it become a valid narrative. Right now, it’s still a game for whales.

#baby $BABY

Babylon’s liquid staking is here, but the 50 BTC cap makes me uneasy

On July 29, pSTAKE Finance launched a Bitcoin liquid staking solution on Babylon. Users deposit BTC into Babylon’s trustless vault, and receive liquid staking tokens in return—earning Babylon’s staking rewards while still being able to use the asset in DeFi. No wrapping, no cross-chain bridges, and no giving up self-custody. The direction is right: the liquidity problem with BTC staking has always been a hard pain point—once locked, you can’t move it. This pSTAKE solution genuinely addresses that.

But there’s one line that worries me: a deposit limit of 50 BTC. Fifty BTC, at current prices, is just a bit over $4 million. A solution meant to address a “liquidity” problem—yet it sets its own liquidity cap first. pSTAKE’s explanation is “to ensure the protocol’s safety.” I understand that early on you need to control risk, but 50 BTC is nowhere near enough relative to Babylon’s TVL of 56,853 BTC—far less than one per mille. pSTAKE provides a liquidity exit for Babylon stakers, but the width of the exit is only 50 BTC. BTC that wants to leave will be stuck waiting in line; it won’t even get a turn. If stakers want to exit at scale, this liquidity window is simply not big enough. @BabylonLabs_io

I asked a friend who runs DeFi strategies: “If a liquidity solution sets a cap of 50 BTC, what do you think?” He said, “It shows they’re still testing. Once the cap is lifted, then you’ll have the truly usable version.” That’s true—but if it’s already being called “liquid staking” now, the real question is whether this liquidity can actually move when it matters.

I’ll come back and reassess once the cap is lifted.
#baby $BABY

Babylon’s third phase: one BTC staked to multiple networks

Babylon’s mainnet phase one has been running for a few months already. The 1,000 BTC staking cap was filled long ago; later it was gradually loosened, and now TVL has exceeded 5.6 billion. This phase is called “lock-only”—users lock their BTC, but the rewards aren’t truly available yet. Phase two’s activation hasn’t fully rolled out.

But the real highlight is phase three, officially called “multi-staking”—the same BTC can simultaneously provide security support to multiple PoS networks. One BTC, staked to several networks at the same time, earning multiple streams of rewards. It sounds like the ultimate form of a compounding machine.

I asked a friend who runs node operations: “If the same BTC helps secure multiple networks at the same time, and one of those networks is attacked, who gets blamed?” He said: “The staker. If you staked it and something goes wrong, the penalties come out of your deposit. No matter how many networks you’re running, when there are slashing events, they’re deducted from the same BTC.”@BabylonLabs_io

That’s the risk of multi-staking. You earn rewards across multiple networks, but the slashing risk stacks up. If one network has a problem, the deduction is from the same pot of money. I asked that friend: “So can the rewards cover the risks?” He said: “It depends on how high the returns are. If the combined annualized rate can reach more than 10%, it’s worth the gamble. If it’s only 3–5%, then you’d be better off not betting.”

Babylon’s third phase is currently still in the testnet stage. Some analysts believe this is the beginning of “one BTC earning multiple reward streams.” From a mechanism-design perspective, that’s indeed the case. But from the standpoint of risk pricing—when one asset bears multiple slashing risks—this math hasn’t really been worked out by anyone in a definitive way. After it’s been running on mainnet for a few months, the data will speak for itself.

#baby $BABY

Babylon’s “security illusion.” I dug through on-chain records

Babylon’s most central narrative is this: let Bitcoin holders stake BTC to provide security services for a PoS chain without giving up self-custody. No bridging, no wrapping, no handing BTC over to anyone. That narrative is undeniably sexy. If you’re someone who holds a large amount of BTC, wants to earn some yield, and doesn’t want the risk of having your funds compromised by cross-chain bridges, Babylon sounds like the answer. @BabylonLabs_io

But when I looked through the on-chain records, I found one thing. After Babylon’s mainnet launched, staking demand really did explode—the 1,000 BTC staking cap filled within a few hours. The problem was fees—Bitcoin network fees jumped from $0.26 to $132 within 90 minutes, a 500x increase. Not because of network congestion, but because Babylon’s staking launch triggered a Gas-fee bidding war. Users, eager to stake before everyone else, kept wildly raising their bids. Someone calculated the numbers: just the operational cost of participating in staking could eat up your future yield for several months—or even an entire year. You get a slot in the staking window, but once you pay the Gas fees, the yield you earn isn’t enough to cover the cost.

What concerns me even more is that Babylon is currently in the first phase of its mainnet—called the “lock-only phase.” Users can lock BTC, but there’s no actual yield distribution yet. You lock it, you pay the Gas fee, and the yield is still “on the way.” So when exactly will it be released? The project says it will happen in “subsequent phases.” But when specifically? They don’t say.

I asked a friend who participated in Babylon staking: “You locked your BTC—did you get any yield?” He said: “I locked it, but I haven’t seen any yield yet. Right now, I’m just waiting.” Waiting for how long? He didn’t know.

Babylon’s direction isn’t wrong—turning BTC into an income-generating asset is indeed a real need. But the term “security illusion” wasn’t coined by me; someone in the community came up with it. Lock BTC, pay Gas fees, and still don’t receive the yield—that’s not staking. That’s just locking.

#baby $BABY

“10 billion BABY + 8% annual inflation” in Babylon—after I did the math, I went silent

Babylon’s token whitepaper looks pretty impressive at first glance. Total supply of 10 billion BABY, with an additional 8% inflation rate every year. What does 8% inflation mean? It means that no matter whether you hold it or stake it, every year an additional 800 million new BABY are minted: 4% goes to BTC stakers, and 4% goes to BABY stakers.

Sounds quite generous, right? But the question I’m thinking about is different: when 800 million more tokens appear each year, will demand be able to keep up?

What concerns me even more is how those 10 billion tokens are allocated. Community incentives 15%, ecosystem development 18%, R&D operations 18%, private sale investors 30.5%, core team 15%. Investors and the team together are 45.5%, almost half. There’s zero unlock in the first year; starting from the second year, they unlock linearly over four years. The community’s 15% does get fully unlocked, used for early airdrops and staking rewards. @BabylonLabs_io

This is the clever part of Babylon’s token model—tokens aren’t unlocked in the first year, so the community tokens can indeed circulate; investors and the team don’t sell in the first year, so selling pressure at launch is smaller. But what about the second year? That 30.5% from investors starts releasing linearly—every month brings a new wave of supply into the market. Can the demand accumulated during year one support the ongoing sell pressure that begins in year two?

I ran the numbers: total supply of 10 billion, 8% inflation every year, plus the investors and team starting linear releases from year two. On the supply side, it’s a continuously opening valve. On the demand side, for now, it mainly relies on the yield from BTC staking. BTC stakers receive BABY rewards—if they sell once they get the rewards, then the loop becomes: “project party prints coins → sends to stakers → stakers dump → price faces pressure.” What’s the difference from those earlier staking projects that were essentially “mine to sell”?

Babylon’s technical narrative is definitely sexy—letting BTC holders stake BTC directly, without bridging, without wrapping, and without third-party custody. But the tokenomics model is a different story. With total supply of 10 billion and 8% inflation each year, how much of that supply can the market actually absorb?

When the second year arrives and investor unlocks truly begin, the answer will be revealed.

#baby $BABY