A Bitcoin fee surge occurred on Aug. 22 as Babylon introduced its native BTC staking service. Early on that day, the average Bitcoin transaction fee was under $1. However, by noon, users were paying between $132 and $137 to transfer BTC following the launch of Babylon’s Bitcoin staking program.

Babylon’s BTC staking allows users to earn yield by depositing crypto directly on proof-of-stake (PoS) networks. This initiative aims to expand BTC utility beyond the “digital gold” narrative, which often promotes holding the asset rather than using it in active financial strategies.

Phase one of Babylon’s staking system was a “locking-only phase,” where users quickly filled the maximum allocation within hours.

On Bitcoin’s proof-of-work (PoW) blockchain, miners validate transactions in exchange for fees. Higher fees can encourage miners to prioritize certain transactions. The rush to participate in Babylon’s staking platform created an on-chain scramble, driving competition for miner priority and pushing BTC fees close to $140, as noted by CryptoQuant analyst J.A. Maartun.

Over 1,000 BTC, valued at nearly $61 million, was prepared for phase two after the race to stake assets. More than 12,700 stakers and 20,610 solo delegates queued up to earn rewards by securing PoS chains with BTC.

Staking in decentralized finance (DeFi) is common among PoS chains, allowing crypto holders to generate passive income from their assets. While this practice is native to PoS networks, developers have been exploring ways to extend it to Bitcoin’s ecosystem.

This move broadens BTC’s role in DeFi, especially as institutional interest in crypto grows. Major financial institutions like BlackRock and Fidelity launched spot BTC ETFs earlier this year, accumulating over $50 billion in assets.

Additionally, some U.S. presidential candidates have discussed creating a national BTC reserve, and institutional ownership continues to rise.

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