Babylon Protocol Sees $21M Bitcoin Unstaked Post-Airdrop

In the 24 hours following the token airdrop, users of the Babylon protocol unstaked over $21 million worth of Bitcoin. According to blockchain data shared by a developer, 256 Bitcoin (BTC) were unstaked from the staking protocol. The unstaking transactions incurred fees of 1.35 BTC and consumed 1.318 Megavirtualbytes (MvB) of blockspace, indicating high fees and significant blockspace usage.

The airdrop, which occurred on April 4, involved the distribution of 600 million BABY tokens to early users and contributors. The airdrop was part of Babylon's Phase 1, which included stakers, NFT holders, and developers contributing to its ecosystem. The distribution breakdown was as follows: 30 million BABY tokens for Pioneer Pass NFT holders, 5 million BABY for open-source contributors, 30 million BABY for stake participation, 335 million BABY for base staking rewards, and 200 million BABY for bonus staking rewards for Phase 2 transition.

Unlike Ethereum and Solana, Bitcoin staking on the Babylon protocol does not reward stakers in the chain’s native asset. Instead, stakers may receive rewards in the form of the native token of the blockchain secured by the staked Bitcoin capital. This unique reward structure likely influenced the decision of users to unstake their Bitcoin following the airdrop.

The airdrop event did not include wallet campaigns and liquid staking incentives. However, in response to the airdrop, a crypto exchange listed the BABY token and USDT pair in pre-market futures, allowing traders to speculate on the asset’s future price before it becomes available in spot markets.

Babylon currently has a total value locked (TVL) of $4.29 billion, representing 80% of the Bitcoin ecosystem’s overall TVL. This significant TVL indicates the protocol's prominence within the Bitcoin ecosystem and the potential impact of the airdrop on user behavior and market dynamics.