Today, we’re exploring the concept of a Bitcoin Secured Network (BSN), a rollup that uses Bitcoin as the backbone of its finality, supported by Babylon’s staking protocol or other Bitcoin staking solutions. By the end of this guide, you’ll understand how this is an important part of BOB's hybrid chain architecture and how we are leveraging the model to become the best place to use Bitcoin and Liquid Staking Tokens (LSTs) in DeFi.
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Why Do We Need Bitcoin Secured Networks?

Bitcoin’s security is unmatched in the world of crypto. It is the largest and most battle-tested blockchain, with trillions in volume secured over the years. However, Bitcoin is also relatively limited in terms of programmability. This means that although you can securely store and transfer BTC on Bitcoin’s main chain, more complex activities like trading, lending or borrowing, remain challenging to implement directly. 

The good news is that BOB’s Hybrid Chain facilitates Ethereum-style DeFi functionality, allowing users to put their Bitcoin to work. But this is only part of the solution, as this doesn’t satisfy the high security demands of many Bitcoiners. This is where Bitcoin finality comes into play.

By integrating with Babylon’s staking protocol and becoming a BSN, rollups like BOB or POS chains are essentially taking advantage of Bitcoin's security guarantees. This allows BTC holders to enjoy advanced smart contract functionality without compromising on trust or finality, with all assets, apps and transactions on BSNs being secured by billions of dollars of staked BTC. 

This is how BOB's hybrid chain fuses the unmatched security of Bitcoin with the DeFi versatility of Ethereum.
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Core Components of a BSN

Most Bitcoin Secured Networks rely on three main components to incorporate Bitcoin’s finality and liquidity into a more flexible DeFi environment:
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Bitcoin staking  

When staking with Babylon, BTC holders do not need to give up their private keys. Instead of handing Bitcoin over to a custodian, users simply sign a special transaction designating their BTC as collateral for network security. If validators in the BSN behave dishonestly, a portion of that staked BTC is slashed. This creates a direct financial incentive for everyone securing the network to act honestly.
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Bitcoin finality

Finality providers (FPs) on a BSN receive delegated BTC from Bitcoin stakers.. If a finality provider misbehaves, their staked BTC and the BTC staked via delegation will be slashed according to the rules of each BSN. It is this financial penalty that deters dishonest actions, ensuring that once transactions are confirmed, they remain secure.
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Liquidity through Liquid Staking Tokens (LSTs)

Staked BTC doesn’t have to remain locked away. Liquid Staking Tokens (LSTs) represent staked Bitcoin, preserving the security benefits of staking while letting users keep a liquid asset in hand. Built on top of Babylon, LST protocols like Lombard or Solv issue LSTs so that BTC staking participants can lend, trade, or provide liquidity in DeFi, earning extra yield on top of their BSN staking rewards. 
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BSN Benefits: Why Users & Networks Choose BSNs

Once a network integrates with Babylon to become a Bitcoin Staking Network, an array of different benefits are unlocked for both users and the network itself.
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For users
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  • Earn yield on native BTC: By staking through Babylon’s protocol, BTC holders gain a chance to earn rewards from fees generated by the BSNs, all while retaining control of their private keys.

  • Yield reinforcement: The more BTC LSTs that are deployed and used on a BSN, the more fees are generated, and the greater the yield returned to the holders of those LSTs. This only works on BSNs due to the sharing of network fees.

  • Self-custody & trustlessness: Unlike traditional wrapped Bitcoin solutions, there’s no need to hand over BTC to a custodian. This aligns with Bitcoin’s ethos of true ownership.

  • Opportunity for additional DeFi gains: In addition to baseline staking rewards, users can leverage LSTs in DeFi, potentially stacking yield on top of what they already earn from securing the BSN.

For BSNs

  • Access to billions in BTC: BSNs benefit from the world’s largest cryptocurrency by market cap. Drawing in BTC holders boosts lending pools, trading volume, and overall network activity.
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  • Increased security & credibility: Staked BTC raises the economic cost of malicious actions, enhancing finality. This means that BSNs can gain the required credibility needed to draw in BTC holders.
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  • TVL Flywheel effect: By sharing fees with BTC stakers, BSNs encourage more Bitcoin LSTs to flow into their DeFi ecosystems. Higher yields attract additional stakers, boosting security and liquidity. This cycle then draws in even more users and Dapps, creating a flywheel growth effect.

BOB as a Bitcoin Secured Network

BOB’s Hybrid Chain is on the path to becoming a Bitcoin Secured Network, which means that transactions on BOB will soon be backed by billions of dollars of staked Bitcoin. This can only happen when Babylon completes development on their side and is ready for the integration.
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Below is a step-by-step walkthrough on what a BTC holder can expect from BOB as a BSN:

  1. Stake Bitcoin for an LST: Use BOB Earn to stake your BTC for a Liquid Staking Token (LST) in a single transaction. Your BTC is swapped for LSTs that represent previously staked Bitcoin. These LSTs maintain the security benefits of Babylon-staked BTC while qualifying you for ecosystem rewards.

  2. Explore leading Dapps: You can immediately put your LST to work in leading DeFi protocols like Uniswap v3 (Oku) and Euler. Whether trading, lending, or providing liquidity, you benefit from low fees and fast confirmation times, all anchored by the economic weight of staked Bitcoin.

  3. Earn yield from two sources: As a BSN, BOB enables powerful dual-yield opportunities for LST holders. You earn base staking rewards through your LST protocol, and you can simultaneously earn additional rewards from DeFi activities like providing liquidity or lending your LST.

  4. Unbond and withdraw BTC: When you're ready to exit, you can unstake your BTC which initiates a short unbonding period. 
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A Bitcoin Secured Future

Bitcoin Secured Networks prove that you no longer have to choose between Bitcoin’s security and DeFi’s flexibility. With Phase 2 now rolling out - BitVM bridge live on testnet and BTC-staked finality next - BOB is on track to anchor every swap, loan, and yield opportunity with real Bitcoin finality. This not only provides the security assurance that so many Bitcoiners demand, but thanks to 1-click staking and BOB Earn, will also offer the easiest way to put one’s BTC to work in an efficient and trustless manner.

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