Benzinga - Babylon, a crypto startup co-founded by Stanford University engineering Professor David Tse, has raised $70 million in its latest funding round.
What Happened: The round was led by crypto venture capital firm Paradigm and included investments from Polychain and Bullish Capital, the company announced on Thursday, according to a Bloomberg report.
This follows an $18 million raise in December from investors such as Hack VC and Framework Ventures.
Although Babylon did not disclose its current valuation or investment details, a representative confirmed that the funds will be used to expand staff and further research and development.
This latest investment highlights a renewed interest in Bitcoin-focused projects among venture capitalists.
Traditionally, Ethereum (CRYPTO: ETH) and other blockchains have been favored for software development, particularly in decentralized finance (DeFi) applications.
However, the success of Ordinals, a type of nonfungible token (NFT) on the Bitcoin blockchain, has sparked renewed interest in building within the Bitcoin ecosystem.
"So Bitcoin is kind of really undergoing a renaissance in the sense that now there's a new wave of projects building on Bitcoin," Tse said.
"Historically, Bitcoin was the first blockchain, but over the years the developer community has shifted away from Bitcoin (CRYPTO: BTC) to new chains…Recently, for multiple reasons, there has been a shift of attention back to Bitcoin."
The increased interest also follows the approval and launch of Bitcoin exchange-traded funds (ETFs) in the U.S. earlier this year, as well as the Bitcoin "halving" event in April, which reduced the mining rewards by half.
These developments have contributed to a growing focus on Bitcoin projects.
Also Read: Robinhood Unveils Crypto Trading API For Advanced US Users
Why It Matters: Babylon’s primary aim is to enable Bitcoin to be used as a staking asset to secure other blockchains.
Staking, a mechanism used by proof-of-stake blockchains like Ethereum, involves locking up cryptocurrency deposits to validate transactions and secure the network, earning rewards in return.
Bitcoin, traditionally a proof-of-work blockchain, uses miners to solve complex puzzles for transaction validation.
Babylon seeks to allow Bitcoin holders to participate in transaction validation on proof-of-stake networks, thereby earning yields on their idle Bitcoin.
"You can think of our project as analogous to Ethereum's staking, but for Bitcoin," Tse explained.
For Babylon and its investors, making Bitcoin a staking asset presents a significant opportunity, as many Bitcoin holders have long sought ways to generate yield from their assets.
Ethereum’s recent transition to a proof-of-stake model, known as the Merge, has increased the appeal of staking as a revenue-generating activity in the digital asset sector.
"In our mind, in the crypto Web3, a very important value is security," said Tse.
"So it is this security that drives this underlying decentralized world that we're building. And so what we're trying to advocate is that Bitcoin being such a large asset can sort of underwrite the security layer for essentially the entire Web3 ecosystem."
Staking remains one of the most lucrative areas in decentralized finance.
According to data tracker DefiLlama, Lido Finance and EigenLayer, two of the top three DeFi projects by total value, fall under the staking category.
Users have collectively sent over $50 billion in cryptocurrencies to these platforms to generate returns.
What’s Next: These developments and their implications for the digital asset market will be key topics at Benzinga’s Future of Digital Assets event on Nov. 19.
Read Next: BlackRock Moves Closer To Launching First Spot Ethereum ETF
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.