The Challenges with Bitcoin Staking

Bitcoin, with its approximately $1.3 trillion market cap, is often considered the backbone of digital assets. Yet, despite its dominance, only a small fraction of Bitcoin is staked. In contrast, nearly 28% of Ethereum’s supply is staked, unlocking billions in economic activity. If Bitcoin holders staked even a fraction of their holdings at similar levels, it could unlock an additional $330 billion in value. So why the disparity?

The answer lies in the unique challenges of Bitcoin staking:

• Cross-Chain Complexity: Staking Bitcoin typically requires cumbersome cross-chain transactions, making it difficult for users to engage in staking activities.

• Limited Programmability: Unlike Ethereum, Bitcoin lacks native smart contract functionality, limiting the ability to create sophisticated staking protocols.

• Liquidity Issues: Bitcoin holders often find it challenging to maintain liquidity while participating in staking, discouraging broader participation.

These issues have made it difficult for Bitcoin holders to access staking rewards while maintaining liquidity. This is where the Staking Abstraction Layer (SAL) steps in.