Definition ∞ BTC restaking is a mechanism allowing Bitcoin holders to utilize their BTC to secure other blockchain networks or decentralized applications. This process involves locking Bitcoin in a protocol that then issues a derivative asset, which can be staked on a proof-of-stake chain. It aims to extend Bitcoin’s security and liquidity benefits to a broader ecosystem. This method seeks to generate additional yield for Bitcoin holders while bolstering the security of other networks.
Context ∞ The conversation around BTC restaking centers on its potential to increase capital efficiency for Bitcoin and enhance the security of newer protocols. Key debates involve the associated risks, such as smart contract vulnerabilities and potential centralization concerns if a few entities control large amounts of restaked BTC. Future developments will likely address these risks through improved protocol design and auditing.
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