Introduction

PumpBTC is a decentralized financial protocol that integrates Bitcoin into Babylon’s liquidity re-staking solution. Traditional staking methods often require users to lock their assets for extended periods, but PumpBTC streamlines the process, enabling users to stake Bitcoin with a single click and instantly receive liquidity tokens, eliminating the wait. By utilizing BTC as a staking asset, PumpBTC broadens DeFi opportunities within the Bitcoin ecosystem and overcomes common challenges of traditional proof-of-stake chains, such as high inflation and complex initial token distribution. This innovative approach offers Bitcoin holders a new avenue for generating stable returns and turns Bitcoin into a yield-bearing asset, fostering a virtuous cycle of stability and growth for the broader DeFi ecosystem.

Ecosystem Collaboration

PumpBTC has built an extensive ecosystem through partnerships spanning various areas of the DeFi space. These partners cover different functions and services in the DeFi space, enhancing the diversity and usability of the PumpBTC platform.

• Blockchain Integration: PumpBTC operates across multiple chains, integrating with EVM-compatible chains like Ethereum, BSC, and Berachain, as well as Layer 2 solutions such as Fuel and Zircuit. This integration allows PumpBTC to operate within a wider blockchain environment, providing greater accessibility and interoperability.
• Lending Platforms: By partnering with platforms such as Compound, Avalon Finance, and Morpho, PumpBTC allows users to maximize capital efficiency through lending services, broadening their financial activities and boosting returns in the DeFi ecosystem.
• Oracles: Collaborations with trusted oracles like Chainlink ensure secure and reliable access to external data, enabling precise execution of smart contracts across the PumpBTC ecosystem.
• Stablecoins: PumpBTC’s ecosystem integrates with stablecoins like Usualmoney, offering users a reliable, price-stable medium for transactions and staking.
• LRT and DeFi Services: Partnerships with platforms like Satslayer and Cycle Network provide liquidity repurchase and trading solutions, enhancing user experience and driving higher investment returns.

Milestones

• On July 7, 2024, PumpBTC launched its mainnet, officially beginning its operations and enabling users to stake their assets in real time.
• On October 29, 2024, PumpBTC secured $10 million in seed funding. This round was co-led by SevenX Ventures and Mirana Ventures, with participation from UTXO, Mantle Ecosystem Fund, Seven Seas Capital, and notable angel investors including Veda, WBTC DAO, and Stepn. The funding will support the expansion of its multi-chain ecosystem and the enhancement of BTC-Fi product features.

Technical Features

PumpBTC combines robust security, multi-chain interoperability, simplified earning mechanisms, and a user-friendly incentive system to unlock new opportunities for Bitcoin in DeFi. These features provide secure and diverse investment options, extending Bitcoin’s market reach and attracting a broader user base.

1. Reliable Asset Security: Partnering with trusted custodians like Cobo and Coincover, PumpBTC ensures Bitcoin assets are safeguarded through a strict 1:1 backup system. Users can keep their Bitcoin secure on its native network while earning staking rewards through the Babylon protocol. This partnership builds trust and provides a secure foundation for user participation.

2. Multi-Chain DeFi Access: PumpBTC enables users to utilize staked Bitcoin across multiple EVM-compatible chains and advanced L2/L3 solutions. This integration enhances Bitcoin’s liquidity and usability across ecosystems, allowing users to employ $pumpBTC as collateral or liquidity tokens. It increases Bitcoin’s liquidity and improves its cross-chain interoperability and application scenarios. Additionally, partnerships with leading DeFi platforms like Pendle, Gearbox, and Morpho further expand opportunities, offering diverse earning strategies. For example, users can stake $pumpBTC for base rewards and amplify their returns with leverage options available on Gearbox.

3. Effortless Yield Generation: Through the Babylon protocol, users can earn native rewards, including Babylon native yield and Babylon Points. This straightforward earning method lowers the entry barrier, making it easy for anyone to participate and benefit from Bitcoin-based DeFi.

4. Engaging Incentives: PumpBTC’s point system rewards users for participating in activities across L2/L3 protocols and other chains. These points unlock additional ecosystem rewards, fostering engagement and loyalty. By responding actively to community needs and feedback, PumpBTC cultivates a dynamic, user-driven platform that continuously evolves to align with its users’ demands.

Core Products

PumpBTC has introduced two groundbreaking products designed to empower Bitcoin holders with greater DeFi participation and yield opportunities while ensuring robust asset security.

1. PumpBTC Liquid Staking
   PumpBTC’s liquid staking service enables users to stake their BTC and receive pumpBTC tokens on a 1:1 basis. These tokens retain full liquidity and can generate returns in the DeFi ecosystem. With pumpBTC, users can earn rewards through Babylon staking while keeping their assets accessible for trading or other financial activities whenever needed. To enhance the utility of pumpBTC, PumpBTC has partnered with over 70 projects, offering expanded use cases and additional reward opportunities. Notably, PumpBTC is the first BTC LSD protocol that supports on-demand deposits and withdrawals, ensuring maximum flexibility for users.

2. BTC-fi Yield Vault
   This soon-to-launch platform combines Veda’s secure CeDeFi infrastructure with innovative yield strategies to provide Bitcoin holders with a seamless and rewarding experience. The BTC-fi Yield Vault bridges centralized finance-level security with decentralized finance scalability. Automatically compounding interest eliminates the hassle of manual rebalancing and maximizes returns by allocating deposits to optimized DeFi opportunities, including Uniswap and Pendle.
   The vault also offers fast deposits, unlimited withdrawals, and transparent operations, ensuring users have a clear view of activities across DEXs and lending protocols. Both products are designed to focus on security and transparency, essential for sustained growth and user trust. With these innovations, PumpBTC opens up new horizons for Bitcoin holders, providing them with safe, efficient, and scalable pathways to grow their assets in the DeFi space.

How Does it Work?

First, users can interact with Bitcoin in forms such as BTCB or WBTC on BSC or other EVM-compatible chains. By staking these Bitcoin assets into the corresponding staking contracts, users receive $pumpBTC tokens. These contracts handle the receipt of users’ Bitcoin (e.g., BTCB, WBTC) and issue an equivalent amount of $pumpBTC tokens. These tokens are directly linked to the Bitcoin staked by users and automatically generate yields from the Babylon protocol.

Next, custodial institutions such as Cobo and Coincover are responsible for delegating users’ native BTC to the Finality Provider of the Babylon protocol. These custodial contracts ensure the security of users’ assets and manage the distribution of rewards. The Finality Provider processes staking transactions from PumpBTC within the Babylon protocol, ensuring transaction finality and submitting finality votes to consumer zones. It also calculates and distributes rewards to PumpBTC users.

As shown in the diagram, $pumpBTC can be transferred between different chains through specific cross-chain bridges. On the source chain, $pumpBTC is burned, while an equivalent amount is minted on the destination chain, ensuring a constant total supply. Each $pumpBTC token is always backed 1:1 by native BTC.

Note:

Consumer Zones refer to specific blockchain networks that interact with the Babylon protocol and $pumpBTC, generating fees through data and transactions facilitated by the PumpBTC system and the Babylon protocol.

Finality Provider is a mechanism that ensures the irreversibility of transactions. In certain blockchain protocols, Finality Providers confirm that once a transaction is included in a block, it is deemed final and cannot be altered.

Finality Voting is a mechanism used in blockchain networks to ensure the immutability of transactions. During the consensus process, finality voting helps confirm that once a block is added to the blockchain, it is considered final and will not be modified or rolled back. Finality Providers are the roles or nodes in the Babylon system responsible for executing these finality confirmations, ensuring that all transactions entering the Babylon protocol via PumpBTC achieve irreversible status.

Minting and Burning of $pumpBTC

• Minting: Users initiate the minting process by depositing assets (e.g., WBTC or BTCB) into the PumpBTC system. The deposited assets are transferred directly to the custodial institutions partnered with PumpBTC, rather than being held in PumpBTC’s accounts, ensuring asset security. Once the custodians receive the assets, they trigger a minting transaction on the PumpBTC smart contract. This transaction instructs the smart contract to create new $pumpBTC tokens at a 1:1 ratio to the deposited assets. The newly minted $pumpBTC tokens are then sent back to the user’s account, enabling them to use these tokens for other DeFi activities.
• Burning: Users return $pumpBTC tokens to the PumpBTC system to initiate the burning process. The smart contract automatically destroys the tokens, ensuring accurate supply management. Once the burn is confirmed, the custodian releases an equivalent amount of the original Bitcoin asset (e.g., WBTC or BTCB) back to the user.

Security Measures

PumpBTC employs three core strategies to ensure the safety and integrity of user assets:

1. Advanced Multi-Party Computation (MPC)
   Through partnerships with Cobo MPC and Coincover, PumpBTC leverages cutting-edge MPC technology to decentralize private key management using a threshold signature scheme (TSS). This approach prevents generating or storing a full private key on any single device or location. Instead, private key fragments are securely generated by multiple parties, enabling collective transaction signing without exposing any individual key information. This eliminates single points of failure and significantly enhances overall system security.

2. Single Point Failure Prevention
   PumpBTC utilizes Coincover’s advanced risk mitigation tools to protect against vulnerabilities and ensure user asset safety. This non-custodial recovery solution defends against threats such as account takeovers, ransomware, and social engineering attacks, providing an additional layer of security.

3. Transparent Operations
   Transparency is central to PumpBTC’s security framework. The platform provides on-chain proof of assets, ensuring every PumpBTC token is backed 1:1 by BTC held in custody. All minting and burning transactions are fully tracked and verifiable on the blockchain. Additionally, PumpBTC offers a user-friendly dashboard showcasing critical network metrics, such as custodian information, real-time minting and burning statuses, total BTC under custody, and the circulating supply of PumpBTC. The dashboard also includes regular audits of custodian key management and provides links to Ethereum and Bitcoin addresses as well as open-source smart contract codes, ensuring full operational transparency.

These measures enable users to independently verify the integrity of the PumpBTC system, building trust in both the platform and its token.

Key Highlights

PumpBTC has seen remarkable growth in total locked value since October, reaching 5,289 BTC (approximately $523 million) with over 28,000 active users. Notably, 66.9% of this value (around 3,540 BTC) is currently staked in the Babylon protocol.

Risk Analysis

1. Technical Risks
   PumpBTC relies on advanced technologies like Multi-Party Computation (MPC) and cross-chain bridges, which enhance security but may still be susceptible to vulnerabilities. Issues such as software bugs or flaws in smart contracts could be exploited, posing risks of asset loss.

2. Custodial Risks
   Despite leveraging professional custodians like Cobo MPC and Coincover to safeguard user assets, the security and operational reliability of these services are vital. Any breaches or mistakes by custodians could result in the loss of user funds.

3. Third-Party Dependencies
   PumpBTC depends on external oracles such as Chainlink for crucial market data and system functionality. Failures or inaccuracies in these oracles or data sources could negatively impact the performance and reliability of the PumpBTC system.

How to Get Started

1. Stake to Earn Rewards
   Visit PumpBTC Mainnet (mainnet.pumpbtc.xyzto) stake assets like WBTC or FBTC and receive PumpBTC tokens in return.

2. Join the PumpFellow Loyalty Program
   Become a part of the official PumpBTC Discord community, gain a verified status, and complete tasks to earn points and rewards.

3. Earn Rewards by Completing Tasks
   Visit the PumpBTC task interface (https://mainnet.pumpbtc.xyz/discover), complete tasks, and earn rewards.

Conclusion

PumpBTC is establishing itself as a key player in the DeFi sector through its strong ecosystem and innovative staking solutions. Although the team is relatively small, the platform’s growing influence and increasing TVL highlight its potential to thrive in a competitive market. By introducing innovative mechanisms, PumpBTC not only enhances Bitcoin’s utility in decentralized finance but also has the potential to transform how Bitcoin holders engage with the DeFi ecosystem. Looking ahead, PumpBTC is poised to expand its reach and offerings, fostering broader adoption of DeFi applications.