Babylon Proposes 30% BABY Inflation Cut and Launches BTC-BABY Co-Staking to Boost Network Partici...

Babylon plans to cut BABY inflation to 5.5% and link BTC staking with BABY for better rewards.

BTC-BABY co-staking will let users earn more by pairing BABY tokens with Bitcoin in the staking system.

The new system will launch on testnet in September with a full mainnet rollout expected in October.

Babylon has introduced a governance proposal to reduce inflation and strengthen ties between Bitcoin and its BABY token. The plan, posted on September 29, suggests lowering the BABY inflation rate from 8% to 5.5% annually. This marks a 30% drop in supply growth.

The proposed breakdown adjusts the distribution of rewards. BTC stakers would receive 1%, BABY stakers 2%, and BTC-BABY co-stakers 2.35%. An additional 0.15% would go to validators and finality providers to support network operations.

This adjustment aims to slow BABY’s supply expansion while maintaining incentives for stakers. The shift reflects Babylon’s move from early adoption efforts to a focus on long-term sustainability. Babylon currently secures $6.38 billion in Bitcoin staked through its protocol.

Co-Staking to Link BTC and BABY Incentives

A major feature of the proposal is the introduction of BTC-BABY co-staking. The mechanism allows users to boost Bitcoin staking rewards by pairing BTC with BABY tokens.

For every 20,000 BABY staked, one BTC becomes eligible for enhanced rewards. For example, staking 6 BTC with 50,000 BABY activates boosted returns on 2.5 BTC. With 150,000 BABY, the full 6 BTC becomes eligible. In April, Binance listed the BABY token as Babylon Genesis launches with Bitcoin staking.

The co-staking design aligns interests between Bitcoin holders and BABY stakers. It encourages both groups to commit to the network, creating a stronger connection between the two assets. The token was launched in April, enhancing its Bitcoin Secured Network with staking and governance features.

Testnet Launch Scheduled Ahead of Mainnet Deployment

Babylon plans to test the new system on a public testnet by the end of September. A full mainnet rollout is expected in October. These timelines suggest Babylon is prioritizing quick implementation.

The upcoming testnet will allow community members to evaluate the changes before full deployment. This stage is key to identifying any adjustments needed for the mainnet version.

The system is designed to evolve further as new tools become available. The co-staking mechanism is an early step in Babylon’s broader roadmap for BTC integration.

Future Plans Include Trustless Vaults and Cross-Chain Access

Babylon is also developing trustless Bitcoin vaults. These will let native BTC interact with decentralized finance applications without bridging or wrapping. Vaults are not yet live, but they represent a key milestone in expanding the network’s capabilities.

Once active, vaults will offer secure access to DeFi tools across different blockchains. Babylon expects its token model to adjust alongside these features. For now, the proposal focuses on reducing inflation and introducing the BTC-BABY co-staking framework.