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Bitcoin Could Get an Ethereum-Style Restking as Startup Lombard Raises $16M
“Restaking” is all the rage in Ethereum blockchain circles. It allows users to earn interest by leveraging their in-game activities to help secure other blockchain apps. Developers in other ecosystems, such as Solana, are also trying to replicate Ethereum’s popularity.
It was therefore only a matter of time before the restaking came to the most valuable blockchain: Bitcoin.
In partnership with Bitcoin staking protocol Babylon, startup Lombard has raised $16 million to develop Bitcoin-based restaking. In addition to capitalizing on the restaking hype, Lombard is the latest startup to integrate Bitcoin into the broader world of decentralized finance (DeFi), a space that has so far been largely devoid of Bitcoin.
“Lombard aims to transform BTC from a store of value to a productive asset that feeds into the Web3 economy and drives sustainable growth,” the company said in a statement shared with CoinDesk.
Polychain Capital led Lombard’s funding round, alongside BabylonChain, Inc., dao5, Franklin Templeton, Foresight Ventures, Mirana Ventures, Mantle EcoFund, and Nomad Capital.
Restaking was introduced on Ethereum with EigenLayer, one of the biggest DeFi success stories in recent memory. EigenLayer has skyrocketed $18 billion in deposits in less than a year by promising users extra interest on assets they had already “staked” to secure Ethereum.
The “restored” EigenLayer resources are pooled to protect a network of other cryptographic protocols that use proof-of-stake securityIn essence, EigenLayer and other restacking protocols enable emerging blockchain apps to bootstrap their own security and offer investors a new way to leverage their cryptocurrency holdings.
Lombard’s dive into restaking will be built on Babylon, which lets people use bitcoin to secure others proof-of-stake networksParadigm previously led a $70 million funding round in the Bitcoin staking company.
Lombard is expanding Babylon’s cross-network security technology with the advent of “liquid bitcoin” tokens, or LBTCs, a kind of tradable receipt on Babylon deposits that Lombard says will allow users to hold liquidity on the BTC they’ve staked to secure other networks.
“By uniting leading DeFi ecosystems and protocols onboard LBTC, over $1.3 trillion in Bitcoin can be used for lending, borrowing, and trading, providing new capital opportunities for bitcoin holders and new capital and users for ecosystems and their protocols,” Lombard said in a statement shared with CoinDesk.
Ethereum’s ETH token began as a staked asset of the moment on EigenLayer. ETH (and ETH derivatives) were thought to be less likely than most other digital assets to experience sudden price drops, which can undermine the security of proof-of-stake networks.
Many of the same attributes that make Ethereum an obvious candidate for restaging also extend to Bitcoin, the oldest blockchain. Bitcoin boasts the largest market cap in the blockchain (1 BTC was worth $63,000 at press time) and tends to be less volatile than other crypto assets.
“Our commitment to Lombard represents a deeper belief in the leverage Bitcoin can have in catalyzing growth across the blockchain space,” Olaf Carlson-Wee, founder of Polychain Capital, said in a statement.