Bitcoin staking enables users to earn yield on their native BTC thanks to protocols like Babylon, Liquid Staking Tokens (LSTs) and Bitcoin wrappers which allow rewards to be earned through lending, restaking and other DeFi mechanisms.


Introduction

It's 2025, and your Bitcoin doesn't have to sit idle anymore.

While the vast majority of BTC is currently doing nothing while sitting in cold storage or centralized exchanges, a growing number of Bitcoin holders and DeFi enthusiasts are starting to earn yield on their Bitcoin through innovative staking solutions.

So, if you've ever wondered how to stake Bitcoin to earn returns on your BTC, you've come to the right place. We'll cover everything from Babylon's staking protocol, Liquid Staking Tokens (LSTs), trust-minimized bridging (BitVM), restaking, and how you can use Bitcoin DeFi gateways like BOB to capitalize on one of the biggest opportunities in cryptocurrency today.

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Can You Stake Bitcoin?

The first question that many people ask is can Bitcoin be staked?

Although Bitcoin's Proof of Work consensus model makes BTC staking (in the same way Ethereum is staked) impossible, protocols like Babylon have created an innovative alternative that allows users to stake their native BTC to secure Proof of Stake (POS) chains - turning them into Bitcoin-secured networks (BSNs). As a reward users are compensated with yield on their stake.

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How Babylon Facilitates Bitcoin Staking

Babylon was the first protocol to enable Bitcoin holders to stake BTC to POS chains in a trustless manner, without requiring any third-party bridging or wrapping. To date, the staking protocol has attracted over $6.3 billion worth of staked Bitcoin, making it the foundation for the entire Bitcoin staking ecosystem.

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The staking mechanism

The way Babylon facilitates staking is by locking BTC on Bitcoin's base layer using time-lock scripts and Extractable One-Time Signatures (EOTS). The result is your Bitcoin remains in a self-managed script on the Bitcoin network, and you never transfer custody or your private keys.

The staking transaction includes conditional clauses - your BTC is locked for a specified period, and if slashing conditions occur (like double-signing), the BTC is sent to a burn address. This in turn ensures real economic security, as validators risk losing their BTC if they act maliciously - creating the same incentives as traditional Proof of Stake systems. 

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Bitcoin Secured Networks (BSNs)

Bitcoin Secured Networks (BSNs) are POS chains that leverage staked Bitcoin for economic security and finality. These are made up of Layer 1 and 2 blockchains, as well as 'application specific' chains that predominantly revolve around Bitcoin DeFi.

Integrating with Babylon allows them to leverage staked Bitcoin to achieve finality (where transactions become permanent and irreversible backed by billions of dollars of BTC. This is further reinforced by the economic security ensured by slashing conditions.

In return, BSNs provide a percentage of their transaction fees to BTC stakers.

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Innovations That Enhance BTC Staking

Thanks to innovations that have occurred over the past year, Babylon-powered Bitcoin staking can be further enhanced so that users enjoy additional benefits. 

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Liquid staking tokens (LSTs)

One of the most significant innovations in Bitcoin staking is the Liquid Staking Token (LST), which solves the fundamental trade-off between earning base yield and maintaining liquidity.

When staking directly through Babylon, your BTC is locked up for the staking period, meaning you can't do anything other than collect base yield until you unbond. LSTs change this dynamic entirely by staking on your behalf, and issuing you a tradeable token that represents your staked position. 

The mechanics are straightforward. You deposit BTC into an LST protocol, which stakes it through Babylon to secure BSNs. In return, you receive an LST that you can freely trade, transfer, or deploy in DeFi for enhanced yields. This includes using your LST as collateral to borrow stablecoins, provide liquidity in DEX pools, or create leveraged positions - all while continuing to earn base staking rewards. This can transform a single BTC deposit into multiple yield streams.

LSTs also create a powerful flywheel effect for BSNs. More LSTs on a BSN like BOB means more BTC liquidity - bringing greater DeFi activity. This increased activity generates more transaction fees, a portion of which flows back to BTC stakers as additional rewards. Higher yields make LSTs more attractive, bringing more LSTs to the platform, which drives more DeFi volume, generating more fees - and the cycle continues.

Notable Bitcoin LSTs include Lombard's LBTC, Solv's xSolvBTC and Bedrock's uniBTC.

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Bitcoin restaking

For users who want to further multiply their staked BTC, Bitcoin restaking allows already-staked BTC or LSTs to secure multiple networks simultaneously, and without requiring additional capital.

Unlike traditional staking that secures one network at a time, restaking protocols like SatLayer and Pell enable your Bitcoin to provide shared security across multiple services. These extend beyond BSNs to include oracle networks, data availability layers, and other applications needing economic security. Moreover your BTC isn't restaked sequentially - it simultaneously secures all chosen protocols at once.

To take part, users simply have to deposit LSTs like uniBTC or xSolvBTC into a restaking protocol like SatLayer, which will then coordinate their stake across different finality providers validating various services. Each secured service pays its own rewards on top of the base Babylon yield.

For this reason, Bitcoin restaking represents a highly capital-efficient addition to already staked-BTC.

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Trust-minimized bridging (BitVM)

While LSTs and restaking enhance yield opportunities, they still require getting your native Bitcoin into these protocols securely. This is why BitVM represents a breakthrough in bridging technology that will enable native BTC to move from the BTC L1 to smart contract chains without needing to trust custodians or multisigs.

Traditional Bitcoin bridges require you to trust a group of entities with your BTC, which means if they collude or get compromised, your funds are at risk. BitVM changes this with a "1-of-N" security model using fraud proofs. As long as just one participant remains honest, nobody can steal funds.

The result is that BTC on BitVM-enabled networks remains native BTC, not a wrapped representation. Just as ETH on Optimism is still ETH, Bitcoin bridged via BitVM is simply BTC. This native status is crucial for Bitcoin staking as it means you're actually earning BTC yield secured by Bitcoin's consensus - not a synthetic asset dependent on third-party custodians.

Combined with Babylon staking and LSTs, it completes the infrastructure needed for truly decentralized Bitcoin staking.

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Bitcoin DeFi platforms

Babylon staking, LSTs, restaking, and BitVM, while powerful on their own, still need infrastructure where they can work together seamlessly. This has resulted in Bitcoin Layer 2s, sidechains, and rollups competing with one another to become the go-to aggregation layer for Bitcoin staking and DeFi.

Notable examples include BOB, Rootstock and Hemi, and while different in technical approach, all share a crucial feature - non-custodial architecture. Unlike staking on Coinbase or Kraken where you hand over your BTC entirely, these platforms let you retain control through smart contracts while accessing yields that custodial services often can't match. Many also support multiple forms of Bitcoin, including wrapped BTC for those who prioritize liquidity, and Bitcoin LSTs.

The real advantage with Bitcoin DeFi platforms is composability. On BOB, for instance, you can stake Bitcoin with an LST protocol, receive an LST, immediately deploy it in Euler's lending markets, and manage everything from one interface. No jumping between protocols, no complex bridging operations - just a straightforward path from idle BTC to earning multiple layers of yield.

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How to Stake Bitcoin on BOB - The Gateway to Bitcoin DeFi

BOB is the Gateway to Bitcoin DeFi - a hybrid chain built on the OP Stack that combines Bitcoin security with Ethereum's DeFi capabilities, enabling 1-click access to BTC yield opportunities across major chains.

Unlike many other Bitcoin L2s that focus on single solutions, BOB's hybrid chain integrates all the complementary innovations (Babylon staking, LSTs, restaking, BitVM bridging, established DeFi protocols, Bitcoin secured bridges to other chains and Bitcoin finality) into one seamless platform where everything works together.

Below are 5 simple steps that will allow you to stake Bitcoin on BOB, and make additional yield on top.

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Step 1: Connect your wallets to BOB

You'll need two wallets - one for sending BTC, and an EVM wallet to receive your staked assets on BOB:

  • Bitcoin wallets: Xverse, Leather, or UniSat
  • EVM wallets: MetaMask, Rabby, or Ledger
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To connect your wallets:

  1. Go to https://app.gobob.xyz
  2. Click "Connect Wallet" in the top-right corner
  3. Select "Connect your EVM Wallet (Mandatory)" - choose your wallet and approve connection
  4. Click wallet button again, select "Connect your Bitcoin Wallet (Optional)" - this is needed for bridging from BTC
  5. Both wallet addresses will display in the top right when connected


*For hardware wallet users, connect your Ledger through Xverse for Bitcoin and MetaMask (or Ledger Live) for the EVM side.

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Step 2: Choose your staking entry method

The next step is to decide what entry method to go with when staking your BTC.

There are two staking methods available to BOB users - one that is automated and requires one click, and the other requiring manual action and oversight:
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Option A: BOB Earn (Recommended)

  • Visit app.gobob.xyz/earn
  • Connect both EVM and Bitcoin wallets
  • Choose which BTC staking strategy to enter
  • Click once to receive a Bitcoin LST on BOB and start earning Spice (BOB points) and LST points 
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Option B: BOB Bridge + manual deployment

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Step 3: Select your staking strategy

Below are the current Bitcoin staking strategies available on BOB Earn:
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Bitcoin LSTs

  • xSolvBTC (Solv): 1x Solv points, 3x Spice + Babylon points
  • uniBTC (Bedrock): 50x Bedrock Diamonds, 3x Spice + Babylon points
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Enhanced strategies

*Information accurate as of 15/09/25
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Step 4: Boost yields further (optional)

To earn additional yield on top of your already-staked assets, BOB users have the option to use Bitcoin LSTs in a variety of ways.

Some examples include:

  • Lending: Use LSTs as collateral on protocols like Euler or Segment to borrow assets or create leveraged positions
  • Liquidity provision: Deploy LSTs in Uniswap via Oku to earn trading fees
  • Restaking: Stake LSTs through SatLayer or Pell for multiplied rewards across multiple networks
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*Please note that these strategies carry additional risks beyond basic staking.
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Step 5: Monitor and manage

Once you have staked your BTC (or boosted your yields further), all that is left is to monitor and manage your positions:
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  • Track performance: Click each strategy on app.gobob.xyz/earn to see position breakdowns and current APY. Links are also provided to websites of staking providers, where more information can be found
  • Claim rewards: Some auto-compound, others need manual collection - check each protocol's requirements
  • Watch health factors: Monitor collateral ratios if using leverage to avoid liquidation
  • Rebalance (optional): Users have the option to move between strategies as yields shift, all within BOB

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Start Earning Bitcoin Yield Today

As this article has shown, your Bitcoin doesn't have to sit idle anymore.

Thanks to Babylon staking, LSTs, and Bitcoin DeFi gateways like BOB, you can now transform unproductive BTC into yield-generating capital while maintaining Bitcoin's security. No complex bridges, no custody risk, no waiting weeks for confirmations.

Currently, only 0.3% of Bitcoin's $2 trillion market cap is in true Bitcoin DeFi, compared to Ethereum's 30%. This means if 30% of Bitcoin were to be staked and deployed, this would account for $750 billion - a 100x opportunity.

Getting started takes minutes. Connect your wallet to BOB, choose your staking strategy, and begin earning yield with just one click. 

Visit app.gobob.xyz/earn to start your Bitcoin staking journey today.