Detailed Explanation of the New Idea of Babylon Chain: Borrowing BTC Security

Written by: Cabin VC

Insights from "Borrowed Security": Babylon Chain

In the current multi-chain ecosystem, the composability brought by modularity is being showcased through more innovative cases.

One narrative worth noting is the development of "shared security" and "borrowed security," which are becoming increasingly prevalent. In various public chains, the consensus mechanism determines many core factors such as the security, scalability, and decentralization of the entire network's L1. The strong consensus and security provided by leading public chains are difficult for other ecosystems to match.

Under the structure of modular blockchains, such security can be "borrowed" and reorganized, presenting another major highlight of the public chain ecosystem.

(Previous shared security solutions often focused on isomorphic cross-chain directions, where the security mechanisms, consensus algorithms, network topologies, and block generation verification logic are consistent among isomorphic chains, making them more suitable for shared validator solutions, but they also have certain limitations.)

The concept of borrowed security is exemplified by EigenLayer, which gained significant attention recently:

EigenLayer's re-staking proposal creates an optional intermediate layer that allows users to deposit staked ETH into a smart contract for secondary staking, enabling them to provide node services for public chains, oracles, bridges, etc., and earn validation rewards.

This network can be seen as a voluntarily chosen subset of Ethereum validators participating in re-staking, sharing Ethereum's security and significantly reducing the cost of validation services.

Through this method of "borrowing ETH consensus layer security," Ethereum's security is borrowed downstream to EigenLayer.

From the perspective of modular blockchains and composability, the idea of "enhancing one's own security by leveraging the security of other blockchains" is a direction worth observing and discussing.

If EigenLayer brings native security from ETH, can this concept be applied to the BTC chain? Bitcoin is the world's most secure blockchain with the strongest consensus, which could serve as a prime example of utilizing BTC mining power to provide external security.

Babylon Chain leverages this idea to achieve "borrowing BTC security" to enhance the security of existing chains. Its essence lies in: aiming to act as middleware, borrowing Bitcoin's security to other POS chains.

Babylon is developed based on the Cosmos SDK, and its architecture is as follows:

(Image source: Babylon white paper)

1) BTC chain, serving as a timestamp service

2) Babylon chain, serving as an intermediate layer

3) Other Cosmos ecosystems, using/consuming security services

Babylon mainly consists of two modules:

1) Babylon chain

2) BE (Babylon-enhancement) module.

(Image source: Babylon white paper)

The BE module is primarily responsible for the following functions:

2.1) The BE module connects to the Babylon chain through the Babylon client, where full nodes publish commitments related to the protocol to the Babylon chain, check the availability of messages, and provide timestamps for messages based on the position of commitments in the Babylon chain, making this data available to PoS nodes.

(It only provides timestamp services, does not execute transactions on the chain, does not participate in tracking, does not store PoS data, and only marks and checks the availability of PoS data. Babylon miners need to check the availability of timestamp data.)

2.2) Connecting to the Tendermint network module (Cosmos ecosystem), PoS nodes (including subsequent nodes) can understand the time and order of the first public disclosure of each piece of data. PoS nodes can use the timestamp of this data in conjunction with the consensus logic of the original PoS protocol to resolve security conflicts, identify violators, and impose penalties.

2.3) The BE module also assists in the execution of other rules, including monitoring PoS chain information, assisting the consensus engine in validating transactions, and communicating with governance modules (approving community funds, paying Babylon transaction fees), etc.

In simple terms, if this module is viewed as a black box, it takes "PoS transactions" as input and outputs the final PoS block containing these transactions.

Through this setup, Babylon uses Bitcoin PoW as a timestamp and data availability layer to introduce BTC-based security to the Cosmos ecosystem:

This model also addresses the issue of the long staking unlock period in Cosmos:

Babylon, as a separate chain, aggregates PoS chains to send aggregated checkpoints (i.e., transaction events that need to be timestamped) to BTC and publishes them on BTC, processing transactions based on BTC's security.

From another perspective, when the BTC network serves as the timestamp service for the PoS chain, the duration of validator node staking will be altered. In this case, the original 3-week period required by the Cosmos zone can be significantly shortened to a matter of hours.

Babylon may bring a new narrative for application chains in the Cosmos ecosystem and introduce new methods for BTC application expansion. Given that BTC has long occupied 60% of the total market capitalization of crypto, the market is still looking forward to BTC being introduced into other ecosystems in a more trustless manner. This idea of "borrowing security" may bring more insights.