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Update April 4, 10:40 am UTC: This article has been updated to insert comments from Bitlayer co-founder Kevin He.
More than $21 million worth of Bitcoin was unstaked from the Babylon protocol in the 24 hours after the platform’s token airdrop, according to blockchain data shared by a developer.
On April 4, Bitfeed developer Mononaut shared that in the previous 24 hours, 256 Bitcoin (BTC) had been unstaked from the staking protocol. Mononaut said that the unstaking transactions paid 1.35 BTC in fees and consumed 1.318 Megavirtualbytes (MvB) of blockspace. This means the transactions generated high fees and occupied roughly a third of an entire Bitcoin block.
The activity followed Babylon’s 600 million airdrop of its native token, BABY, which was distributed to early users and contributors.
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Babylon airdrops 600 million tokens to early adopters
In a previous Cointelegraph interview, Babylon co-founder Fisher Yu said that, unlike Ethereum and Solana, Bitcoin staking does not reward stakers in the chain’s native asset. Instead, they may get rewards in the form of the native token of the blockchain secured by the staked Bitcoin capital.
On April 3, the Babylon Foundation announced the details of the airdrop program for its early adopters. The protocol said the airdrop was dedicated to its Phase 1 stakers, non-fungible token (NFT) holders and developers contributing to its ecosystem.
The staking protocol said it was airdropping 600 million BABY tokens, 6% of its total supply; 30 million BABY were allocated to the protocol’s Pioneer Pass NFT holders, while 5 million BABY were slated for open-source contributors.
The rest of the tokens were to be distributed among eligible stakers who participated in the protocol’s Phase 1. This included a stake participation airdrop of 30 million BABY, a base staking reward airdrop of 335 million BABY and a bonus staking reward airdrop for Phase 2 transition of 200 million BABY.
While the platform distributed an airdrop for its early adopters, it clarified that it did not include wallet campaigns and liquid staking incentives in this airdrop event.
In response to the airdrop, crypto exchange OKX listed the BABY token and USDT pair in pre-market futures. Pre-market futures allow traders to speculate on an asset’s future price. This allows investors to trade BABY futures before the asset becomes available in spot markets.
Babylon unstaking a “common” short-term behavior
Even though millions in BTC were unstaked after the airdrop, the effect may be minimal. Bitlayer co-founder Kevin He told Cointelegraph this was “common short-term market behavior.”
The executive said this simply represents early redemption. Furthermore, He said the high transaction fees stem from Babylon’s initial design and do not impact its long-term value.
He added that Babylon garnered significant attention with its tokenomics and airdrop, which boosts community engagement. The executive said the protocol plays a “key role” in Bitcoin DeFi, pushing Bitcoin beyond being simply a store of value.
Data platform DefiLlama shows that Babylon currently has a total value locked (TVL) of $4.29 billion. This represents 80% of the Bitcoin ecosystem’s overall TVL of $5.34 billion.
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