The Babylon stake protocol, which is currently being developed, announced that it has raised $18 million in a joint Series A financing round led by Polychain Capital and Hack VC. According to Babylon’s announcement on December 7th, other investors in the round include Framework Ventures, Polygon Ventures, Castle Island Ventures, OKX Ventures, and Symbolic Capital.
Notable Statements from David Tse
David Tse, co-founder of Babylon and engineering professor at Stanford University, stated that the project began raising funds for the round at the end of July and that the process has now concluded. Tse explained that this round is a similar structure to Babylon’s announced $8 million seed financing round in March. He refrained from commenting on Babylon’s valuation in this round.
The Babylon protocol will allow Bitcoin holders to stake their assets in a proof-of-stake blockchain network and earn returns. The protocol will essentially allow PoS chains to introduce a stake presence in the Bitcoin ecosystem. Babylon aims to use Bitcoin’s security measures to enhance the security of PoS chains.
Praise for Babylon
PoS chains are currently secured by capital derived from their native tokens. However, this capital can be costly, especially for emerging chains, as high staking rewards and inflation rates are required to attract such capital to the platform.
For example, the Cosmos Hub community recently approved a proposal to reduce the maximum inflation rate of its native token, Atom, from approximately 14% to 10%. With the approved change, the annual staking yield of Atom was reduced from around 19% to approximately 13.4%, leading to an increase in the token’s value.
Tse revealed that Babylon has been in talks to support the Cosmos Hub and Polygon networks during this process. Sandeep Nailwal, co-founder of Polygon, stated:
“Babylon is contributing to the Polygon CDK and, more broadly, the Polygon ecosystem. Integrating Babylon’s solutions into Polygon’s staking hub not only enhances the security of emerging chains but also eliminates the inflationary pressures inherent in traditional staking models.”