Wondering why your Bitcoin transaction cost $100 this morning instead of pennies? Look no further than Babylon Labs, the team that just unlocked native staking capabilities for BTC.
On Thursday at 11:38 UTC, Babylon announced the launch of the first phase of its Bitcoin staking mainnet, opening the floodgates for users to lock up their coins via self-custodial staking.
Within 90 minutes, the median cost per Bitcoin transaction skyrocketed from $0.26 at block 857905 to a peak of $132 per transaction at block 857911, according to on-chain data from mempool.space.
“With Babylon’s protocol, stake your Bitcoin directly on any [proof-of-stake] system and earn yield while maintaining total control,” wrote Babylon to Twitter on Thursday. “No third-party addresses, bridging, or oracles needed.”
Babylon clarified that its staking system is still in Phase 1—a “locking-only phase” with no actual payouts to BTC stakers. In future phases, Babylon will launch a proof-of-stake (POS) chain secured by the coins locked during Phase 1, and eventually allow stakers to earn rewards by using the same stake to secure multiple POS blockchains.
That incentive alone triggered an avalanche of inflows into Babylon, having reached its maximum staking total value locked (TVL) of 1,000 BTC ($60.7 million) within hours. That included funds from 12,710 stakers and 20,610 individual delegations.
Being first in line required users to have their staking deposit transaction processed by Bitcoin miners before others could. Getting your transactions prioritized requires paying more money per transaction, thus inspiring a fee bidding war on Thursday that sent costs through the roof.
CryptoQuant confirmed to Decrypt that Babylon was behind the fee spike, using on-chain evidence.
“The sudden spike in total fees, from 0.3 Bitcoin to 9.6 Bitcoin [($18,090 to $579,000)] in an hour, is a result of transactions related to the launch of the Babylon protocol,” said CryptoQuant Head of Research Julio Moreno. An hour later, he added, fees per block surged as high as 15 BTC ($905,000).
Further evidence was visible in the massive number of transfers worth exactly 0.05 BTC (just over $3,000 worth) this morning—the maximum amount that Babylon would let users stake per transaction.
With the staking limit reached, Bitcoin transaction costs have now returned to under a dollar apiece. While inconvenient for standard Bitcoin users in the short term, Vincent Maliepaard—marketing director at IntoTheBlock—said the brief fee spike “might be a good thing” for BTC miners struggling in the current climate.
“Average transaction fees are actually incredibly low and keep falling,” he told Decrypt, adding that it’s “not great for miners.”
Edited by Andrew Hayward
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Andrew Throuvalas
https://decrypt.co/245962/bitcoin-fees-skyrocket-babylon-launches-native-btc-staking
2024-08-22 16:06:05
