Bitcoin Staking Industry Could Reach $10B By End Of 2025, Says Babylon Labs Co-Founder David Tse

The Bitcoin BTC/USD staking industry could grow into a $10 billion market by the end of 2025, according to David Tse, co-founder of Babylon Labs, a key player in expanding Bitcoin's utility through staking innovations.

Speaking in an interview with Benzinga on the sidelines at ETH Denver, Tse outlined a bullish outlook for Bitcoin staking, driven by its trustless nature and growing adoption across blockchain ecosystems.

The potential of Bitcoin staking

With $5 billion in Bitcoin already staked since Babylon's mainnet launch in August 2024, Tse sees significant room for expansion as the cryptocurrency evolves beyond its store-of-value roots.

Tse highlighted that Bitcoin staking, currently representing just 0.3% of all Bitcoins with 56,000 BTC staked, has untapped potential.

"I envision that there will still be a lot of potential to increase this amount of Bitcoin staked," he said, setting a goal to surpass $10 billion by year-end 2025. He emphasized the appeal of staking's trustlessness, noting, "There's no third party involved.

There's a direct interaction between the staker and Bitcoin chain."

This characteristic, he argued, aligns seamlessly with Bitcoin holders' tendency to hold rather than trade, creating a natural synergy with its established role as a store of value.

Trends in Bitcoin

The growth of Bitcoin staking comes amid broader institutional adoption of cryptocurrencies, a trend Tse ties to macroeconomic shifts and the introduction of Bitcoin exchange-traded funds (ETFs) in early 2023.

He suggested that staking could further enhance institutional interest by introducing yield-bearing opportunities, such as potential Bitcoin-staking ETFs.

"Right now Bitcoin doesn't earn any yield," Tse said, pointing out that staking ETFs could cover fees and attract more investors, distinguishing them from existing non-yielding ETFs.

Technologically, Bitcoin staking is poised to bolster security and interoperability across blockchain networks.

Tse explained that Babylon has integrated with platforms like Cosmos ATOM/USD, Optimism OP/USD, and Arbitrum ARB/USD, but scaling to other blockchains requires significant infrastructure development.

He sees Bitcoin's stable, unchanging core as a foundation for building trustless use cases, such as collateralized lending protocols, which could redefine its role in decentralized finance (DeFi).

However, he acknowledged challenges, including the lack of a smart contract layer on Bitcoin, which his team addresses through cryptographic innovations like BitVM to enable cross-chain functionality.

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Bitcoin staking and regulation

Tse also addressed risks and regulatory factors shaping the industry.

He identified slashing—penalties for validator misbehavior—as the primary risk for Bitcoin stakers, though he believes it can be mitigated with robust infrastructure and insurance solutions.

On regulation, he stressed its critical role, particularly for institutional participation.

"Regulatory clarity, particularly on staking, is super important, I think, for the advance of the industry," he said, expressing hope that recent administrative changes in the U.S. could pave the way for clearer rules.

As Bitcoin's halving events raise questions about its long-term security budget, Tse argued that increased transaction activity from staking and other use cases could bolster miner fees, complemented by advancements in mining technology.

With Babylon Labs at the forefront, Tse's vision positions Bitcoin staking as a transformative force, potentially turning a $5 billion foothold into a $10 billion industry within the next ten months.

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