Bitcoin staking protocol closes $18 million round led by Polychain and Hack VC.

Babylon has raised $18 million to develop a protocol that allows users to deposit bitcoin to secure a proof-of-stake blockchain.

Polychain Capital and Hack VC led the round, with Framework Ventures, Polygon Ventures, and OKX Ventures also participating.

Bitcoin’s continued price rise coincides with increased distribution of dry powder by mining companies. But Babylon’s raise suggests investors are interested in more than just GPU funding: finding new use cases for Bitcoin.

Babylon originated from Stanford’s Blockchain Lab. It presented a new way to stake Bitcoin as an economic security token on a blockchain that uses proof-of-stake to reach consensus. Proof-of-stake chains typically use native tokens for staking. For example, Ethereum secures the Ethereum network, so the security of chains that do not find native tokens may be compromised.

Read more: Let’s Talk Bitcoin Staking: Babylon’s Lightpaper

Babylon’s staking service has joined the Bitcoin ordinal in an attempt to use Bitcoin for purposes other than a store of value. Although the Bitcoin Community Contest refers to novel use cases for Bitcoin, Babylon founder David Tse believes there is demand for his product among asset holders.

“I think a lot of them want to participate in revenue-generating opportunities, and that’s who we’re targeting. So for those who truly believe that Bitcoin is nothing but gold, we should leave that belief to them,” Tse said.

Tse said Babylon will hit testnet in January 2024. The protocol would ideally go to mainnet in April, when Bitcoin’s “halving” occurs, when the Bitcoin rewards to miners are cut in half. Tse pointed out that the mainnet deployment largely depends on the results of the security audit of the Babylon testnet.

Tse said “several” Bitcoin miners participated in the funding round but declined to disclose the value of Babylon.

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