Persistence One is a purpose-built Layer 1 designed to maximize yield and security through Liquid Staking and Restaking. It expands Liquid Staking, creates LSTfi yield opportunities, and brings Restaking to the Cosmos ecosystem.
As a Proof-of-Stake (PoS) blockchain, Persistence is always looking for routes to improve its security and keep the network safe.
With the Bitcoin blockchain ecosystem starting to flourish – following the introduction of BRC-20 and Ordinals – a new technology has emerged to help PoS systems bolster their dependability and soundness by sharing the battle-tested security from Bitcoin’s PoW system.
This new method of sharing security allows Bitcoin holders to earn yield through idle assets while enhancing the security of Proof-of-Stake (PoS) chains through staking.
What is Shared Security Between Proof-of-Work and Proof-of-Stake?
Shared security is a mechanism that allows Bitcoin holders to stake their idle $BTC coins to provide security on PoS chains.
With a $1 trillion+ market cap, Bitcoin is the largest blockchain system in the world. It keeps its network secure by forcing miners to solve really tough math problems using a Proof-of-Work consensus mechanism.
The PoW algorithm makes the Bitcoin network the most secure blockchain in the industry. It requires vast amounts of computational power to solve the math problems necessary to unlock blocks. As a result, a malicious actor would need enormous computational resources to manipulate the Bitcoin blockchain, making it an economically unviable endeavor.
Conversely, most alternative blockchains use a more energy-efficient mining algorithm to secure their networks through PoS.
Rather than requiring miners to solve math problems, PoS systems secure blockchains through financial stakes. Validators must stake a portion of their assets to act as a security deposit to secure the network. The staked deposit is a deterrent to malicious activity, as it’s liable to slashing if the staker attempts to attack the network. This slashable staking architecture lies at the core of PoS blockchain security.
The concept of shared security involves Bitcoin holders staking their idle $BTC coins to provide security on PoS chains, allowing them to earn a yield. Any slashable asset can be used to secure a PoS blockchain, and with recent innovations from BTC staking protocols like Babylon, Bitcoin is now a slashable asset.
The Current Problems With PoS Blockchain Systems
The recent Ethereum merge shows that PoS blockchain systems have become a norm over PoW systems as they are more environmentally sustainable and scalable. However, several problems with PoS systems still need to be addressed.
One issue in PoS blockchain systems is that they require users to lock their tokens away for security, often resulting in high inflation as PoS chains usually overcompensate rewards for their security needs. In addition, locking tokens into the protocol for security means they become illiquid (a problem that we solve at Persistence through Liquid Staking).
The security of a PoS chain is also dependent on how well the native token is distributed. If the majority of the token supply is distributed in the hands of a few holders/validators, it goes against the ethos of decentralization.
Finally, there’s also an unbonding dilemma at play. Users that stake tokens will experience their staked assets being locked in an unbonding period to deter malicious actions and ensure long-term commitment to the PoS chain. Again, this creates illiquidity problems as it restricts the movement of the tokens during the unbonding period.
These problems in PoS security have led to innovative solutions leveraging existing digital assets for greater security.
This is where Bitcoin shared security steps in and can solve the quest for abundance security.
Why Would Persistence One Want to Borrow Security from Bitcoin?
Borrowing security from Bitcoin would allow Persistence One to use some of the battle-tested security features of PoW to help bolster its security, without diluting XPRT’s token utility. By combining the robust security of Bitcoin with the energy-efficient PoS algorithm, security sharing brings together the best of both consensus mechanisms.
Bitcoin’s proven resilience, unrivaled hash rate, and expensive attack vectors make it the most secure blockchain. Borrowing some of this network security by anchoring Persistence’s PoS chain into Bitcoin’s security algorithm will help lend credibility to the Persistence One chain through the trust and recognition earned from PoW.
Although the Persistence One app chain maintains one of the highest bonded ratios(~75%) among all PoS chains – we’re always looking for further avenues to improve our security.
A PoS chain’s economic security is increased as the market capitalization of its staked assets rises. Borrowing security from Bitcoin will help Persistence One tap into a reservoir of unutilized utility and value.
How Can It Be Achieved?
Persistence One is collaborating with Babylon Chain to unlock the potential 21 million Bitcoin to secure the Persistence One chain.
Babylon has created an innovative design that helps redefine security for PoS chains by utilizing Bitcoin’s untapped potential through its blockchain marketplace.
Bitcoin staking can be considered a two-sided marketplace. On one side lies the PoS chain, which needs security and pays yields for that security. On the other side lie Bitcoin holders with idle $BTC who want to earn a yield. Babylon Chain helps realize this marketplace through its security-sharing protocol.
Using Bitcoin scripts and cryptographic techniques, Babylon has created a trustless, self-custodial Bitcoin staking protocol that allows $BTC holders to stake their assets on PoS chains without bridging or trusting a third party with custody. The Bitcoin scripting language enables Babylon to turn Bitcoin into a slashable asset that can be utilized to secure PoS chains, providing the same protection mechanism utilized in PoS architecture.
Babylon intends to expand Bitcoin’s utility beyond a store of value or medium of exchange by extending its robust security with other chains. Babylon is a modular protocol that can seamlessly secure any PoS chain. Furthermore, PoS chains have complete autonomy in choosing how much security to borrow and yield to reward stakers.
Conclusion
Overall, the latest innovation in extending Bitcoin’s utility beyond a store of value helps unlock almost a trillion dollars of liquidity that can be used to secure PoS chains. By utilizing idle assets, sharing Bitcoin security with PoS chains makes sense as it provides a secure yield for stakers while helping to increase security for other PoS blockchain protocols.
As Persistence sits at the forefront of innovation, we’re eager to embrace newly emerging technology before the rest of the industry. We’re incredibly excited to join hands with Babylon on this latest endeavor to bring heightened security to the Cosmos PoS ecosystem.
About Persistence One
Persistence One is a purpose-built Layer 1 on a mission to maximize yield and security through Liquid Staking and Restaking. It offers a technically advanced, secure, and robust infrastructure for modular and smart-contract dApps.
pSTAKE Finance is a Cosmos-focused LST issuance protocol for ATOM, OSMO, BNB, and DYDX built on Persistence One that empowers users to earn staking rewards while participating in DeFi.
Dexter is a decentralized exchange on Persistence One that offers capital-efficient trading and yield opportunities for LSTs, stablecoins, and other tokens.
Persistence One is bringing Restaking to Cosmos. Become a Persister today!
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