Bitcoin Staking
Abstract
The idea of security sharing goes back to Nakamoto's introduction of merge mining, a technique that enables Bitcoin miners to reuse their hash power to bootstrap and secure other Proof-of-Work (PoW) blockchains. However, with the rise of Proof-of-Stake (PoS) chains, there is a need for new methods of Bitcoin security sharing. We introduce Bitcoin staking, a protocol that allows Bitcoin holders to trustlessly use their idle asset to secure a PoS chain. The key challenge is to enable automatic slashing of bitcoins on the Bitcoin chain upon safety violations on the PoS chain. We achieve this using double-authentication-preventing signatures, finality gadgets and bi-directional timestamping between Bitcoin and the PoS chain. Our design is entirely modular and can be integrated with any PoS chain. A version of this protocol was deployed to secure the Babylon mainnet in April 2025 and currently has over 58,000 bitcoins staked (about 4 billion USD at current prices) while paying only 0.05% APR reward to the stakers. This is 2 orders of magnitude cheaper security cost than in PoS chains secured by their native token.
Cite
@article{arxiv.2408.01896,
title = {Bitcoin Staking},
author = {Xinshu Dong and Orfeas Stefanos Thyfronitis Litos and Ertem Nusret Tas and David Tse and Robin Linus Woll and Lei Yang and Mingchao Yu},
journal= {arXiv preprint arXiv:2408.01896},
year = {2026}
}