TL;DR
- Bitcoin transaction fees skyrocketed to $132 due to the launch of native staking by Babylon Labs, compared to the previous average of $0.26.
- Babylon Labs launched the first phase of its Bitcoin staking mainnet, allowing users to lock up BTC without immediate rewards.
- The spike in transaction fees, from 0.3 BTC to 9.6 BTC within an hour, was due to the massive demand generated by the launch.
Bitcoin transaction fees experienced a sharp increase following the launch of native BTC staking capabilities by Babylon Labs. This surge in costs occurred suddenly on Thursday, with fees reaching a peak of $132 per transaction, compared to the average of $0.26 prior to the event.
Babylon Labs announced the start of the first phase of its Bitcoin staking mainnet at 11:38 UTC, allowing users to lock their BTC via self-custodial staking. This initial phase, with no reward payouts, focuses on locking up funds without offering immediate returns to participants.
People are rushing to 'stake' Bitcoin 🤯
This causing transaction fees to skyrocket from $0.50 to $137. https://t.co/6YzZMIiFHf pic.twitter.com/b43UMNzFMJ
— Maartunn (@JA_Maartun) August 22, 2024
Subsequent phases will include the launch of a proof-of-stake (POS) chain backed by the locked BTC, ultimately allowing users to earn rewards by securing multiple POS blockchains.
The impact of Babylon’s launch was immediate, with a flood of entries into the system that led to reaching the maximum total value locked (TVL) of 1,000 BTC, equivalent to $60.7 million, within hours. This volume included contributions from 12,710 stakers and 20,610 individual delegations.
Up to 15 Bitcoin in Fees Per Block
To gain priority in the staking process, users had to pay higher fees for their transactions to be processed before others. This mechanism triggered a bidding war on fees, significantly driving up transaction costs.
CryptoQuant confirmed that the increase in fees, which rose from 0.3 BTC to 9.6 BTC in an hour, was due to transactions related to the Babylon protocol launch. An hour later, fees per block surged as high as 15 Bitcoin, approximately $905,000.
A high volume of transfers of exactly 0.05 BTC, the maximum amount allowed by Babylon for staking per transaction, was observed. Although this situation was inconvenient for regular BTC users in the short term, the temporary fee increase could be beneficial for Bitcoin miners.
