Babylon Labs and Lombard Protocol have announced a partnership to bring liquid Bitcoin staking to Sui, the fast-growing layer-1 blockchain. Starting in December, Bitcoin holders will be able to stake their BTC on Babylon, a Bitcoin layer-2 (L2) network, and mint Lombard’s liquid staking token (LST), LBTC.
The initiative, revealed on November 25, aims to integrate Bitcoin liquidity into Sui’s decentralized finance (DeFi) ecosystem. LBTC is set to become a pivotal asset, enabling lending, borrowing, and trading on Sui while unlocking Bitcoin’s $1.8 trillion worth of liquidity.
Unlocking Bitcoin Liquidity
“Bitcoin’s $1.8 trillion market capitalization represents immense untapped potential,” said Jacob Phillips, co-founder of Lombard Protocol. By introducing LBTC to Sui, Bitcoin holders can explore new opportunities in on-chain finance without compromising security or liquidity.
Cubist, a blockchain development firm, will provide the technical infrastructure to enable BTC deposits, staking, minting, and bridging to Sui. The project aims to grow the adoption of Bitcoin-backed financial products, with LBTC acting as a foundational asset within Sui’s burgeoning DeFi landscape.
Sui’s Rapid Growth
Launched in 2023, Sui has quickly gained traction, with $1.4 billion in total value locked (TVL), according to DefiLlama. Known for its high-performance decentralized applications (DApps), Sui has been dubbed a “Solana killer” for its innovative architecture and growing user base.
Bitcoin liquid staking tokens (LSTs) are an emerging trend in crypto, with a combined TVL of $4.5 billion, per Stakingrewards.com. Solv BTC (SolvBTC) leads the market with $1.5 billion in TVL, while Lombard Protocol ranks second at $1 billion.
The Mechanics of Bitcoin LSTs
Bitcoin LSTs function as tokenized claims on BTC staked to layer-2 networks like CoreChain and Babylon. Similar to proof-of-stake (PoS) staking, Bitcoin holders lock up BTC as collateral to secure the network and earn rewards.
Lombard’s LBTC, the largest LST on Babylon, has yet to distribute staking rewards. Meanwhile, competitors like SolvBTC already offer yields, with an annual percentage rate (APR) of approximately 1.2% from staking BTC on CoreChain.
The race to attract Bitcoin liquidity is intensifying. In October, Solv Protocol launched a Bitcoin LST on Solana, aiming to capitalize on growing yield opportunities for BTC holders. With Babylon and Lombard’s new initiative, Sui is positioning itself as a competitive player in this rapidly evolving market.
This partnership marks a significant milestone in expanding Bitcoin’s utility, enabling BTC holders to participate in DeFi ecosystems without sacrificing liquidity or security.
