Babylon chain may be the most undervalued Bitcoin DeFi bet: Nansen

The Bitcoin DEFI ecosystem can finally be ready to face the big players, because a new project operates the inherent security of Bitcoin.

Bitcoin’s Defi ecosystem won a new player, Babylon, who could shape his future. In a recent reportNansen called the project potentially one of the most undervalued parts on the Bitcoin DEFI ecosystem.

Above all, Babylon allows users to win rewards of jealizing in terms of Bitcoin without counting on wrapped active ingredients or transversal bridges. In doing so, the protocol exploits the security and decentralization inherent in Bitcoin, offering a safer and more native alternative for the clears.

The process, nicknamed the Bitcoin appeal, consists in locking BTC in a script on the Bitcoin blockchain. The Babylon protocol then uses an SDK Cosmos transaction to check if the funds are in chain. Once checked, the Babylon chain distributes rewards to BTC stakes proportional to their assets.

Where the Bitcoin reward awards come from

Since Bitcoin himself does not offer a rewards of staking, these incentives come from the Babylon chain, mainly by the inflation of baby tokens. Its annual inflation rate of 8% is divided uniformly between Bitcoin and Baby Stakers.

This means that baby tokens stakers are betting that token growth will exceed the inflation rate of 8%. For Bitcoin holders, however, the protocol creates a new income flow without abandoning custody of their assets – protect them from third -party risks such as hacking or carpet prints.

In the past year, the Bitcoin DEFI ecosystem has experienced substantial growth. Its ecosystem has reached a summit of all time Nearly $ 8 billion in December of last year. Even after a subsequent correction of $ 5.27 billion, he still experienced more than 500% growth from one year to the next.

Developers and entrepreneurs are betting more and more on Bitcoin Defi because of its high name recognition and its large user base. At the same time, they see decentralized funding as a means of unlocking new use cases for the Bitcoin network.