Bitcoin Transaction Fee Spikes 120x Following Staking Rush on Babylon

Bitcoin transaction fees soared by a massive 120x due to the staking frenzy on Babylon's platform.

We've reached our staking cap!

A massive thank you to everyone who participated in this groundbreaking launch. The future of Bitcoin staking is here, and it's stronger than ever!

Stay tuned for more updates on the next events of the Babylon Bitcoin Staking mainnet!... pic.twitter.com/dTMVU8S7ZX

- Babylon (@babylonlabs_io) August 22, 2024

Babylon is a modern platform that enables BTC holders to utilize the Proof-of-Stake (PoS) mechanism and earn yield staking Bitcoin. The platform gives BTC holders complete security and control over assets. Users can stake their BTC tokens without giving up their custody.

This method attracted users, causing a massive surge in transaction fees. However, at the end of the Babylon staking event, they returned to normal rates.

Babylon Unveils Phase 1 of Bitcoin Staking, Receives Strong Community Response

Babylon enables users to earn yield without third-party addresses, oracles, or bridging.The team successfully completed Phase 1 of its Bitcoin staking project with a massive community response.

This Phase 1 is a lock-only phase where BTC stakers will not receive any payouts. It attracted over 12,710 stakers with 20,610 individual delegations.Babylon Labs rose to its staking cap of 1,000 BTC a few hours after its launch.

The next phase of Babylon's project will launch a Proof-of-Stake chain to secure the Bitcoin locked in Phase 1.Also, stakers will earn more rewards by utilizing the same stake to secure several Proof of Stake blockchains.

Solv Protocol topped the list of successful stakers with 250 BTC staked on the Babylon platform. It delegated the 250 BTC to OKX Earn Finality providers.BTC transaction fees increased during the staking rush, confirming massive interest from investors in the product.

Babylon Cap-1 Filled!

We're excited to announce that we've successfully staked 250 BTC and delegated to Solv Protocol & OKX Earn finality providers, securing SolvBTC.BBN's position as the No.1 Liquid Staking Solution for @babylonlabs_io.

Plus, Solv will cover all gas fees... https://t.co/VmZHQkkfJ5 pic.twitter.com/5GEFwB3c08

- Solv Protocol (@SolvProtocol) August 22, 2024

BTC Transaction Fees Spike on Babylon

Head of Research at CryptoQuant, Julio Moreno, reported that Bitcoin transaction fees spiked from 0.5 to 60 BTC during the staking event. Moreno noted that the increase in transaction fees came from staking transactions on the Babylon platform.

Total Bitcoin transaction fees spiked today from 0.5 to 60 Bitcoin on an hourly basis.

This was related to transactions looking to stake Bitcoin on @babylonlabs_io staking protocol.

Total staking was capped at 1K Bitcoin so people rushed to stake and paid high fees. Each... pic.twitter.com/XRppYKVHLj

- Julio Moreno (@jjcmoreno) August 22, 2024

The total staking limit for Phase 1 was 1,000 BTC, and each staking transaction was worth 0.05 BTC. However, the fees dropped when the staking event ended on the platform.

Co-Founder of pStakeFinance Highlights Babylon Labs Progress

Reacting to the latest development,Mikhil Pandey, co-founder of pStakeFinance,revealed that his firm staked 10 BTC out of its 50 BTC deposit on Babylon Labs.

.@pStakeFinance staked 10 BTC from its 50 $BTC deposits into @babylonlabs_io Cap 1

Onchain forensics, Number Crunching, and our Engineering Prowess helped us save >$7.5k (20% less) in fees.

Here's how we gave our users one of the best Bitcoin Staking experiences... https://t.co/oDkvNrrJHz pic.twitter.com/7Roauzxioc

- Mikhil Pandey (@PandeyMikhil) August 22, 2024

Also, he mentioned that on-chain forensics helped pStakeFinance save approximately $7,500 on gas fees despite the increase. Based on their careful approach, pStakeFinance paid approximately 20% less gas fees than other users on the Babylon platform.

According to Pandey, pStakeFinance calculated and timed its deposit based on certain factors, such as Bitcoin's block size.Hence, the 50 BTC deposit into pSTAKE was divided into two groups, creating two different transactions with separate fees.

Other factors were also considered, such as expected traffic, transaction size (vB), Babylon points, and the maximum BTC to pay as fees. PStakeFinance found an efficient method to stake 10 out of the 50 BTC at minimal transaction fees.

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