DeFi
Startup Lombard raises $16M to enable Bitcoin staking
The emerging trend of “resttaking” in Ethereum blockchain circles is now extending to Bitcoin, the blockchain with the highest market capitalization.
Retaking allows users to earn additional interest by using their staked assets to support the security of other blockchain applications. Observing its growing popularity, developers across various ecosystems, including Solana, are exploring ways to integrate this feature.
Extension to Bitcoin
This growing interest has led to the inevitable expansion of resttaking to Bitcoin. In a strategic move, startup Lombard, in collaboration with Bitcoin staking protocol Babylon, has successfully raised $16 million to develop Bitcoin-based resttaking solutions.
This initiative is based not only on The retaking buzz but also positions Lombard as a forerunner in bringing Bitcoin closer to the broader decentralized finance (DeFi) sector, where Bitcoin has so far had limited involvement.
Source: Lombard
Lombard aims to transform Bitcoin from a simple store of value into a productive asset that engages in the Web3 economy, thereby driving sustainable growth, according to a statement released by the company.
The funding round, led by Polychain Capital, also included participation from entities including BabylonChain, Inc., dao5, Franklin Templeton, Foresight Ventures, Mirana Ventures, Mantle EcoFund and Nomad Capital.
Resttaking debuted on Ethereum via EigenLayer, quickly becoming a major DeFi success. In less than a year, EigenLayer amassed $18 billion in deposits by promising additional interest on assets that users had already staked to secure Ethereum.
The protocol pools these “staked” assets to protect a network from other cryptographic protocols that rely on proof-of-stake security. Essentially, EigenLayer and similar protocols help new blockchain applications strengthen their security and provide investors with innovative ways to leverage their cryptocurrency holdings.
Building on Babylon’s foundation, Lombard’s resttaking venture allows Bitcoin to be used to secure other proof-of-stake networks. This new phase builds on a substantial $70 million investment previously led by Paradigm in the BTC staking company.
Introducing Liquid Bitcoin Tokens
One of Lombard’s major innovations is the creation of “liquid bitcoin,” or LBTC, tokens that serve as negotiable receipts for deposits made to Babylon. These tokens are designed to allow users to maintain the liquidity of the bitcoins they have staked across different networks.
Lombard’s integration of leading DeFi ecosystems and protocols to support LBTC could potentially unlock over $1.3 trillion in Bitcoin, providing ample opportunities for Bitcoin holders to lend, borrow, and trade, thereby attracting new capital and users to the ecosystems and their protocols.
Initially, Ethereum’s ETH token was the asset of choice for staking on EigenLayer, largely due to its price stability, which is vital to the security of proof-of-stake networks. Bitcoin, known for its substantial market value and relatively low volatility, is also considered a prime candidate for resttaking.
At the time of writing, one BTC was worth $63,000. Olaf Carlson-Wee, founder of Polychain Capital, noted that investing in Lombard was a testament to their deep belief in Bitcoin’s ability to catalyze growth across the blockchain industry.
The application of resttaking to Bitcoin illustrates a growing trend. Established cryptocurrencies are being used to enhance the security and functionality of decentralized finance (DeFi), a burgeoning ecosystem of financial applications.
This opens up new investment opportunities and paves the way for a deeper integration of traditional finance with the world of digital assets.