Bitcoin Staking

Bitcoin Staking Mechanism in StrongHodl

User Interacts with the Protocol: Users begin the staking process by interacting with StrongHodl's smart contracts from a secure interface compatible with popular wallets.
BTC Deposit: The user deposits their BTC, which is sent directly to a custodian for staking in Babylon.
Initial Conversion to shBTC: Once the transaction is validated, the user’s BTC is converted into shBTC, a synthetic token backed 1:1 by BTC. This token serves as a liquid representation of Bitcoin and is designed to integrate into DeFi ecosystems.

Secure Storage: The BTC deposited by users is transferred to reputable custodians with transparent audits and institutional-level security measures.
Review and Monitoring: Custodians ensure the protection of the deposited assets through constant monitoring, cold storage, and advanced encryption techniques.
Transparency Guarantee: Users can verify the existence and backing of their BTC through public auditing tools provided by the protocol. This system guarantees the security of the deposit and protocol during its initial phases; decentralized solutions will be explored later if supported by the community.

Delegation to the Babylon Protocol: The stored BTC is delegated to the Babylon protocol, an innovative solution that allows Bitcoin staking to strengthen the security of Proof of Stake (PoS) systems.
Yield Generation: Babylon uses BTC staking to provide security to PoS chains, generating native yields that are then distributed proportionally among the participants in the protocol.

shBTC as a Liquid Asset: The issued shBTC allows users to participate in multiple opportunities within the DeFi ecosystem, such as lending, liquidity provision, and yield farming.
Cross-Chain Interoperability: shBTC is issued on Ethereum and Solana, offering the flexibility to transfer assets between chains to maximize yield opportunities.

Last updated 1 month ago