RedStone Oracles, a prominent oracle data provider for smart contracts, has introduced a new service tailored specifically for Bitcoin staking. This marks a significant advancement for Bitcoin-based liquid staking tokens (LSTs), enabling them to expand their use cases within decentralized finance (DeFi).
Unlocking New Capabilities for Bitcoin Staking
With RedStone’s new Bitcoin staking oracles, users can now stake their Bitcoin in exchange for Bitcoin-based LSTs such as Lombard Staked BTC (LBTC) on the Ethereum blockchain. These oracles facilitate the integration of Bitcoin LSTs into various DeFi platforms, expanding their potential beyond simple liquidity provision on decentralized exchanges (DEXs).
Marcin Kaźmierczak, co-founder and COO of RedStone, emphasized the importance of this launch during an interview, He explained that this development represents the first time Bitcoin LSTs can be utilized for lending and other DeFi activities, similar to how Ethereum-based LSTs like wstETH from Lido are used.
Understanding Staking Oracles and Their Importance
Oracles are essential for connecting blockchain networks with real-world data. They verify off-chain information and bring it onto the blockchain, enabling smart contracts to access accurate and timely data. In DeFi protocols, oracles are used extensively for lending, staking, and other financial applications.
Staking oracles, in particular, collect crucial information such as staking rewards, slashing events, and other necessary data for the proper management of LSTs. These inputs are vital for maintaining the accuracy and functionality of staking platforms like Lido, which offers stETH.
Without staking oracles, Bitcoin LSTs would be limited to providing liquidity on DEXs, as this is one of the few applications that doesn’t require real-time off-chain data verification. However, with RedStone’s new Bitcoin staking oracles, Bitcoin LSTs like LBTC can now be integrated into DeFi lending platforms such as Morpho and Compound. Additionally, they can be used on protocols like Gearbox for composable leverage, enhancing their utility and flexibility.
Expanding DeFi Opportunities for Bitcoin Holders
Kaźmierczak highlighted the benefits of this development for Bitcoin holders. They now have the option to stake Bitcoin through platforms like Babylon or Lombard and receive LBTC, which can be deployed on the Ethereum mainnet. This new feature is expected to drive immediate growth and adoption of Bitcoin LSTs within the DeFi ecosystem, similar to the expansion seen with Ethereum-based LSTs.
He added that even a small yield on the substantial value of Bitcoin could be highly significant, given Bitcoin’s volatility and growth potential. This opens up new avenues for investors to generate returns and participate in DeFi activities with their Bitcoin holdings.
Backed by Major Investments and Partnerships
This latest development follows RedStone’s $15 million Series A funding round, led by the crypto investment firm Arrington Capital. The investment aims to accelerate RedStone’s mission to build and enhance its oracle technology, further supporting its goal of integrating Bitcoin into the DeFi space in a meaningful and secure way.
