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Without Bitcoin staking oracles, BTC-based liquid staking tokens can be only used to provide liquidity on DEXs, according to RedStone co-founder Marcin Kaźmierczak.
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RedStone Oracles, a major provider of oracle data to smart contracts, has launched Bitcoin staking oracles explicitly designed for BTC staking.
With the new implementation, users can stake their Bitcoin (BTC) in exchange for Bitcoin-based liquid staking tokens (LSTs) like Lombard Staked BTC (LBTC) on the Ethereum blockchain.
Marcin Kaźmierczak, RedStone’s co-founder and chief operating officer, announced the news to Cointelegraph on Oct. 8. He stated that this marks the first time BTC LSTs are ready for implementation in decentralized finance (DeFi) for lending and other use cases.
What are staking oracles, and why are they needed?
Blockchain oracles are services that act as a bridge between real-world data and events and blockchains. They aim to verify real-world offchain data on the blockchain.
Oracles are widely used across many DeFi protocols, including in lending, which allows users to borrow using their crypto holdings, and staking, which enables them to generate rewards by locking crypto assets into a smart contract.
Blockchains cannot connect to real-world data and events on their own. Source: Chainlink
Staking is an emerging, increasingly popular crypto-economic model across the smart contract ecosystem, which is directly relevant to oracle networks.
Staking oracles specifically collect and verify critical inputs such as staking rewards, slashing events and other crucial data required for the proper functioning of LSTs such as Lido Staked Ether (stETH).
Without oracles, Bitcoin LSTs can be only used to provide liquidity on DEXs
With RedStone’s newly launched Bitcoin staking oracles, users are free to use Bitcoin LSTs like LBTC in a similar way as one could use wstETH from Lido, Kaźmierczak told Cointelegraph.
For example, users can implement LBTC in DeFi lending on platforms like Morpho and Compound. They can also use the oracles and LBTC on Gearbox Protocol to generate composable leverage.
RedStone’s chief of staff Tomasz Płatek (left) next to co-founder and chief operating officer Marcin Kaźmierczak. Source: LinkedIn
Related: Liquid restaking protocol Bedrock suffers $2M exploit
“As a Bitcoin holder, you can stake your Bitcoin via Babylon or go through Lombard to receive LBTC, their LST token on Ethereum mainnet,” Kaźmierczak said, adding:
“Without oracles, LBTC can be only used to provide liquidity on decentralized exchanges, as this doesn’t require oracles.”
According to the Redstone co-founder, the introduction of Bitcoin staking oracles will likely trigger an “immediate change” in adopting the DeFi ecosystem around Bitcoin LSTs, similar to how it is now created around Ethereum LSTs.
“Due to the nature of Bitcoin that can grow with market excitement, even a small percentage of yield on a large underlying value is a big thing,” Kaźmierczak stated.
The news comes a few months after RedStone Oracles raised $15 million in a Series A funding round led by major crypto investment firm Arrington Capital.
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This article first appeared at Cointelegraph.com News
