23 August 2024 · Block Height 858086 · Bitcoin Price $61K

Welcome back to the Blockspace Newsletter!

For today’s recap, we dig into how the Babylon Chain launch sent Bitcoin transaction fees a to multi-month high, and we finish up with the latest notable news and fundraising in the world of Bitcoin Season 2.

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What caught our eye this week

Fees are ripping thanks to Babylon Chain’s launch

“Bitcoin staking” protocol Babylon launched its mainnet Thursday morning, and the ensuing land rush to stake BTC on the platform pumped fees from 5 sat/vbyte to 1000+ sat/vbyte in the matter of blocks. 

Babylon opened up 1000 BTC worth of first-come-first-serve staking with max increments of 0.05 BTC, so roughly 20,000 transactions were competing for the first staking spots. This race to stake precipitated the highest fee rate surge since the Runes protocol launch in April. And Babylon’s not done yet – this only represents the first of several incremental staking unlocks.

Miners and users who want to hedge against this volatility could find products like Alkimiya or Luxor’s Hashprice derivatives useful as the fees on Bitcoin become more volatile. These blockspace derivatives markets offer traders the unprecedented ability to trade transaction fee volatility. (This is not financial advice, so don’t blame us if you lose your shirt…).

For more info on Babylon Chain, check out our interview with Babylon founder David Tse on Bitcoin Season 2.

News roundup

With the wrapped bitcoin saga, a $9 billion market is up for grabs

• A lot of hot potato action for wrapped bitcoin (WBTC) this week. BitGo announced that it is migrating WBTC to Tron, a move that prompted MakerDAO to drop the bitcoin IOU token. The move comes at a time when competitors are spinning up similar tokens. Coinbase announced its own wrapped BTC product on Base, cbBTC, and Aave is considering onboarding Thesis’s tBTC.

It’s Bitcoin smart contract summer

• Bitcoin metaprotocols are heating up again. This time, many of them require users to post data to Bitcoin, but the logic for the “smart contracts” is handled off-chain. We wrote about how some of these work in our Tuesday newsletter this week.

Magic Eden is launching … a token? 

• MagicEden announced $ME, a cross-chain dApp (remember that term?) token claimable through their new wallet. Magic Eden plans to integrate $ME across their marketplace for runes, ordinals, and future BTC dApps.Chart of the Week

Raise roundup

Ark Labs raises $2.5m

• Bitcoin scaling solution Ark raised $2.5m led by Tim Draper. Ark originally required a soft fork like OP_CHECKTEMPLATEVERIFY to work, but developers recently discovered workarounds using partially-signed bitcoin transactions. That said, the workarounds are clunky, and covenants would be a huge boon to the project. 

Liquid Bitcoin staking Satlayer raises $8m pre-seed

• Alongside Babylon’s mainnet release, Satlayer announces its raise to build a liquid staking platform for Babylon users.

Satflow raises $7.5m

• Bitcoin Ordinals sniping platform Satflow opened to the public this week, and it announced a $7.5m raise led by Variant which also included Coinbase Ventures’ first ever Bitcoin-only investment.

Chart of the week

This chart really puts the Babylon Chain staking rush into perspective. At the peak of this activity, transaction fees were 5x the current Bitcoin block subsidy of 3.125 BTC.

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