Quick Overview of Babylon Staking
(in honor of the high fees in the mempool earlier)
You lock up your Bitcoin into a Taproot script with a few spending paths:
1. A time-locked path: You can unlock your Bitcoin with your own key
2. A non-time-locked path: A 2-of-2 multisig with (1) your key and (2) a Babylon committee multisig (in case you want to unstake prior to your full staking duration in the time-locked path)
3. A slashing path: A 3-of-3 multisig with (1) your key, (2) the committee multisig key, and (3) the key of the destination chain where you are staking. Babylon uses EOTS (extractable one-time signatures) to mathematically expose the destination chain key if you maliciously double sign blocks.
Self-Custodial Staking
Once you lock up your Bitcoin into this script and you provide your signature for the slashing path, then your Bitcoin is considered staked.
Even though there is a committee multisig, this is theoretically self-custodial staking because as long as everything is implemented properly, nobody can steal your Bitcoin and nobody can freeze your Bitcoin, although you may have to wait until the end of your lock period to withdraw your Bitcoin, and if you act in a malicious way your Bitcoin can be slashed.