Just as Ethereum has pivoted to try and solve the decentralized app developer’s security bootstrapping headaches, Bitcoin is now offering the same through the advent of Bitcoin Validated Services, otherwise known as BVS.
BVS is an innovation from SatLayer, the pioneering liquid restaking protocol on Bitcoin, and it aims to transform how decentralized applications or dApps can secure themselves within the crypto ecosystem. It allows dApps to leverage the unrivaled security of the Bitcoin blockchain, similar to how Ethereum’s Actively Validated Services make it possible for developers to tap into the security of the world’s top smart contract blockchain.
What this means is that Bitcoin, which boasts more value than all other blockchains combined, can now be used to secure dApps, providing a compelling solution to the enormous challenge of bootstrapping security themselves. By using BVS to leverage Bitcoin’s security, dApps can essentially eliminate the over-collateralization requirements necessary to secure themselves, while simultaneously boosting capital efficiency for Bitcoin DeFi users.
What is a BVS?
A BVS is a dApp or decentralized service that relies on restaked Bitcoin to validate its operations. They utilize the architecture of SatLayer, which is deployed as a smart contract on the Babylon Chain that’s designed to enable Bitcoin staking. In this way, Satlayer is to Bitcoin what EigenLayer is to Ethereum. It enables programmable slashing for the restaked capital that’s used to validate BVS, which ensures that any malicious behavior will be punished through the loss of all or some of that capital.
In this way, BVS provides a strong layer of crypto-economic security for Bitcoin-native dApps while enabling investors to earn additional rewards with their staked Bitcoin receipts.
SatLayer says BVSs can be used to secure everything from network bridges to DeFi dApps and zero-knowledge proofs.
How do they work?
In the BVS ecosystem, there are three participants. The most important is the Bitcoin restakers, who can “restake” their staked BTC tokens or liquid staking tokens via SatLayer. Then there are the node operators, who are tasked with running the necessary software and actually validating BVS dApps. To become an operator, it’s necessary to register with SatLayer, then set up the necessary hardware and software and start running it.
The operators compete for restaked BTC from the community, then choose the BVSs they would like to validate, and in return, they will be rewarded for providing such a service. They’ll then pass on a portion of those rewards to the Bitcoin restakers who back them, ensuring everyone is compensated for their participation.
The third participants are the dApps themselves that are deployed as BVS’s, benefiting from the underlying security of Bitcoin.
The BVSs are deployed as smart contracts on Babylon Chain, which is a dedicated Bitcoin staking network. The idea with Babylon is that users can stake BTC to provide security for third-party proof-of-stake blockchains that lack sufficient capital to provide their security. BTC stakers earn rewards for doing this and also receive what’s known as a “receipt token”, which can now be restaked on BVS’s.
With each BVS, there are both on-chain and off-chain enforcement mechanisms in place. The on-chain smart contract details the slashing terms and reward payments for operators, while the off-chain container helps with execution.
Enhancing Bitcoin’s utility
SatLayer believes that its BVSs can be used to support almost any kind of dApp or service in the Bitcoin ecosystem, including network bridges that connect Bitcoin’s blockchain with Layer-2 networks. In this case, the solvency of the bridge would be backed up by restaked capital.
Other use cases include decentralized exchange or DEX platforms, which could leverage BVS to settle transactions across networks, validating them with Bitcoin’s crypto-economic security. Other possible applications include decentralized insurance protocols, DeFi lending and borrowing dApps, and even AI agents.
By bringing BVS to Babylon Chain, SatLayer aims to unlock more than $2 billion in staked BTC security that’s already being used to back a number of PoS blockchains. By unlocking the liquidity that’s currently stored in those staked tokens, SatLayer can amplify both the security it provides and the value that’s paid out to investors.
In other words, SatLayer and its BVS’s are the latest example of Bitcoin innovation, further expanding the utility of BTC. Bitcoin’s staking ecosystem remains nascent, but by proving the same level of opportunity as Ethereum, its potential is unmatched.
