The swiftly growing trend of “restaking” within Ethereum blockchain communities is now spreading to Bitcoin, the highest market value blockchain.

Restaking enables users to earn extra interest by using their staked assets to enhance the security of other blockchain applications. Recognising its increasing popularity, developers from other ecosystems, such as Solana, are looking into ways to incorporate this feature.

The growing interest in restaking has naturally expanded to Bitcoin. In a strategic move, startup Lombard, in partnership with the Bitcoin staking protocol Babylon, has secured $16 million to create Bitcoin-based restaking solutions.

This strategic effort not only demonstrates the potential of restaking in the Bitcoin ecosystem but also positions Lombard as a key player in integrating Bitcoin with the wider decentralised finance (DeFi) sector, an area where Bitcoin has historically had limited participation.

As stated by the company, Lombard intends to transform Bitcoin from a simple store of value into a yield-bearing asset that actively participates in the Web3 economy, promoting sustainable growth.

The funding round, led by Polychain Capital, saw contributions from BabylonChain, Inc., dao5, Franklin Templeton, Foresight Ventures, Mirana Ventures, Mantle EcoFund, and Nomad Capital.

Restaking first appeared on Ethereum via EigenLayer and swiftly became a major DeFi success. In under a year, EigenLayer accumulated $18 billion in deposits by offering additional interest on assets that users had already staked to secure Ethereum.

The protocol pools these "restaked" assets to protect a network of other crypto protocols based on proof-of-stake security. Essentially, EigenLayer and similar protocols enhance the security of new blockchain applications and provide investors with innovative ways to utilise their cryptocurrency holdings.

The Future of Bitcoin in Defi

As Lombard Finance continues to develop and expand its Bitcoin-based restaking initiative, the future of Bitcoin in the DeFi space appears promising. By enabling Bitcoin holders to earn additional returns on their assets, Lombard is unlocking new opportunities for passive income and financial growth. This development could increase Bitcoin's adoption within the DeFi ecosystem and further integrate the world's most valuable cryptocurrency into the digital economy.

The Impact on Bitcoin Holders

The introduction of restaking presents a significant opportunity for Bitcoin holders. By staking their assets and earning additional returns, they can generate passive income and enhance their financial stability. This shift could lead to greater adoption of Bitcoin as a productive asset rather than merely a store of value.

The Broader DeFi Ecosystem

Lombard's initiative will benefit the broader DeFi ecosystem significantly. By incorporating Bitcoin, Lombard is enhancing the liquidity and security of DeFi protocols. This could spur greater innovation and growth in the DeFi space as more assets become available for lending, borrowing, and trading.