In 2024, the restaking market witnessed a significant shift from emerging narratives to breakthrough realities. Meanwhile, the decentralized value of BTC and the popularity of new innovations like Ordinals have refocused attention on the Bitcoin ecosystem, heralding the arrival of “BTCFi Summer.”

Pell Network, the first restaking-based AVS network in the BTC ecosystem, reached a TVL of $190 million within three weeks of its pre-launch, attracting participation from 220,000 unique addresses. These impressive figures not only demonstrate Pell Network’s popularity in the market but also reflect a strong user interest in understanding or participating in Pell Network.

So, what is Pell Network all about? This article will analyze this emerging protocol from the perspectives of the market outlook for BTC re-staking, Pell Network’s technical architecture, application scenarios, and platform ecosystem to help users gain a deep understanding of the latest developments in the Bitcoin re-staking ecosystem.

BTC Restaking Track, A Good News for BTC Stakers

For a long time, one of the main issues faced by BTC holders has been how to maximize the yield on their assets. The traditional way of holding BTC was limited to holding and trading, with relatively narrow channels for earning returns. With the emergence of Liquid Staking, BTC holders can stake their assets to earn passive income, increasing the efficiency of BTC utilization, but these options still seem insufficient to meet the current needs of users.

The restaking track will completely solve this problem. EigenLayer has already proven the feasibility of the re-staking track in the Ethereum ecosystem, attracting $15 billion in TVL, which accounts for 4% of Ethereum’s market cap ($370 billion). EigenLayer not only utilizes LSD assets to create a vast re-staking ecosystem but also further becomes a consensus layer that upholds Ethereum’s security.

These successful experiences have quickly been adopted by the Bitcoin ecosystem. Babylon, a protocol focused on native BTC staking, was the first to launch. Users stake their native BTC into Babylon, and the protocol uses the staked BTC to help secure PoS chains and validate transactions on these chains. In return, the PoS chains provide security yields to Babylon and BTC holders. Babylon makes previously unstakable BTC stakable, achieving a transformation from 0 to 1.

Pell Network, as an extension of Babylon, allows BTC LSD holders to re-stake their tokens and achieves cross-chain interoperability and programmable trust. This fully extends the security of BTC assets to the entire Bitcoin ecosystem and even other mainstream public chains. Pell Network and Babylon perfectly combine to help the Bitcoin staking ecosystem achieve a leap from 1 to 100. It is roughly estimated that the BTC re-staking track could see a unicorn protocol with TVL surpassing $45 billion, and Pell Network has already become one of the leading competitors.

Pell Network Technical Architecture

Pell Network is the first full-chain AVS (Actively Validated Services) network that provides cryptoeconomic security for decentralized infrastructure through BTC LSD (Liquid Staking Derivatives) re-staked assets.

Pell Network not only fills the security gap in the ecosystem but also significantly reduces the cost of building decentralized applications and provides passive income for BTC holders.

In simple terms, the Pell Network ecosystem consists of three main roles: stakers, operators, and developers. In this system, stakers participate in network activities by staking BTC LSD into Pell Network. Operators manage and run the AVS network within Pell Network, using BTC LSD to enhance network security. Meanwhile, developers focus on designing and adjusting slashing and reward mechanisms for decentralized systems.

1. Pell Network Restaking Assets

Pell Network offers multiple revenue pathways, allowing stakers to earn additional income by securing new AVS (Actively Validated Services). Broadly speaking, these assets can be linked to three different layers of the blockchain: core protocol, AVS, and DeFi. Liquid staking can be seen as first entering the core protocol and then the DeFi layer to accumulate returns. In Pell Network, there are several forms of restaking:

Pell Network Restaking Asset Flow

Native Restaking Assets: Validators can re-stake their BTC by pointing their withdrawal credentials to the Pell Network contract. This corresponds to the BTC → Pell Network income stack.

LSD Re-staking Assets: Validators can restake their LSD (BTC staked through other protocols) by transferring the LSD to the Pell Network smart contract. This corresponds to the DeFi → Pell Network income stack.

BTC LP Restaking Assets: Validators stake a pair of LP tokens containing BTC. This corresponds to the DeFi → Pell Network income stack.

LSD LP Restaking Assets: Validators stake a pair of LP tokens, one of which contains a liquid staked BTC token. This corresponds to the BTC → DeFi → Pell Network income stack route.

2. AVS Network (Actively Validated Services)

Pell Network’s AVS network is one of its core competitive advantages. This innovative system uses the protocol’s re-staked assets to provide cryptoeconomic security for various audiences and supports customizable slashing conditions and reward thresholds.

Regarding whether the expected revenue from AVS can cover the operator’s operating costs and whether operators have sufficient computing resources to participate in AVS validation, Pell Network has designed different modules to propose two solutions:

• Large-Scale AVS

In large-scale AVS, the total computational workload is evenly distributed across all participating operator nodes. This method is referred to as horizontal scaling in distributed computing. For example, in a large-scale data availability protocol, data is divided into N blocks, each block being 2/N the size of the original data, making the total cost of storing data equivalent to the cost of storing data by just two nodes. In such AVS, the data processing demand on each node may be low, but the entire system can achieve high throughput by aggregating the performance of multiple nodes.

Additionally, compared to traditional blockchain systems, large-scale AVS reduces reliance on centralized verification since, in a blockchain without horizontal scalability, verification costs can be entirely borne by the operators.

• Lightweight AVS

Lightweight AVS includes tasks that are repeatedly executed by all operators but have very low costs. Examples include verifying certain information using lightweight clients, verifying zero-knowledge proofs, running lightweight nodes of other blockchains, and executing oracle price information. These tasks have very low computational and infrastructure requirements, making them suitable for running on Pell Network.

Through this layered AVS design, Pell Network can capture most of the potential revenue. This approach ensures that even individually operated validators can gain substantial economic benefits from Pell Network, effectively reducing the centralization pressure on staking.

Currently, Pell Network has successfully attracted over five AVS operators to sign letters of intent for cooperation, thanks to its well-designed AVS network. This network effectively enhances the capital efficiency of BTC holders through the re-staking mechanism and achieves a perfect blend of security, flexibility, and efficiency.

Pell Network Application Scenarios and Ecosystem

As the consensus layer of the ecosystem, Pell Network leverages advanced cryptographic technology to enhance ecosystem diversity and security, accelerating the application of innovative technologies. Pell Network provides a solid foundational service for a broader range of upper-layer applications.

Pell Network reduces the cost for developers in terms of security infrastructure, allowing them to focus on business logic. This makes Pell Network extremely suitable for building various new types of Actively Validated Services (AVS), including new blockchains, middleware, and modular blockchain layers such as oracles and data availability layers. Below are some potential application directions:

Oracles: Pell Network can quickly build economically secure oracle networks, allowing developers to focus more on data processing and feeding without expending significant effort to construct independent AVS layers.

Large-scale DA Layer: Utilizing the re-staking mechanism and community power within Pell Network, a highly efficient and low-cost large-scale data availability (DA) layer can be constructed.

Light Node Cross-chain Bridge: Based on Pell Network message transmission, it will be very easy to build light node cross-chain bridges. Stakers can verify cross-chain signatures off-chain. If challenge events are proven to indeed have discrepancies, validators within Pell Network will be slashed in slow mode (non-optimistic).

DApps Applications: Pell Network aggregates Bitcoin’s security across all modules, making it more suitable for DApps applications that depend on data security, such as privacy DeFi protocols, blockchain games, Web3 AI applications, etc.

RWA Systems: The RWA (Real-World Assets) track within the DeFi sector usually develops in a Yield mode, and the combination with the re-staking model will become a market hotspot in the next 3-5 years. Pell Network possesses a significant capability for processing and maintaining underlying data, undoubtedly making it the first choice for RWA platforms.

Through these application scenarios, Pell Network aims to provide more diverse and efficient services for the blockchain ecosystem, thereby promoting the development and innovation of the entire industry.

Conclusion

Pell Network’s vision is to establish a decentralized trust-free market, enhancing the economic and security utility of the Bitcoin network through diverse staking options and restaking mechanisms. Stakers can directly operate nodes or delegate to other node operators, providing secure validation services and earning additional income, thereby maximizing the capital efficiency for BTC holders.

Furthermore, Pell Network supports the construction of lightweight and large-scale decentralized components, offering cost-effective solutions for the infrastructure and application security of the Bitcoin ecosystem. This aims to drive exponential growth and development in the Bitcoin ecosystem.

According to Pell Network’s roadmap, the platform will launch its testnet by the end of July and is expected to launch the mainnet in October. Additionally, Pell Network is building the first official AVS oracle and will share token incentives with early participants who help establish the network.

In the future, Pell Network will continue to push forward the development of BTC restaking, providing safer and more efficient solutions for the decentralized finance ecosystem. If you are a BTC holder or interested in decentralized finance, consider following the development of Pell Network and joining this innovative platform to share in the substantial benefits brought by blockchain technology.

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