The to-be-deployed Babylon network that features Babylon's BTC Staking and BTC Timestamping protocols comprises the following components:
- 2 Babylon Finality Provider Nodes running the base Tendermint consensus and producing Tendermint-confirmed Babylon blocks
- 3 Finality Provider daemons: Hosts one or more Finality Providers which commit public randomness and submit finality signatures for Babylon blocks to Babylon
- BTC Staker daemon: Enables the staking of BTC tokens to PoS chains by locking BTC tokens on the BTC network and submitting a delegation to a dedicated Finality Provider; the daemon connects to a BTC wallet that manages multiple private/public keys and performs staking requests from BTC public keys to dedicated Finality Providers
- BTC Covenant Emulation daemon: Pre-signs the BTC slashing transaction to enforce that malicious stakers' stake will be sent to a pre-defined burn BTC address in case they attack Babylon
- Vigilante Monitor daemon: Detects attacks to Babylon
- Vigilante Submitter daemon: Aggregates and checkpoints Babylon epochs (a
group of
XBabylon blocks) to the BTC network - Vigilante Reporter daemon: Keeps track of the BTC network's state in Babylon and detects Babylon checkpoints that have received a BTC timestamp (i.e. have been confirmed in BTC)
- Vigilante BTC Staking Tracker daemon: Tracks the state of every BTC delegation on the BTC network and reports important events (e.g., activation, unbondings) to the Babylon network; also submits slashing transactions in case of double-signing offences
- A BTC simnet acting as the BTC network, operated through a bitcoind node
The following containers should be created as a result of the make command
that spins up the network:
[+] Running 14/14
✔ Container eotsmanager Removed 0.0s
✔ Container vigilante-submitter Removed 0.0s
✔ Container vigilante-monitor Removed 0.0s
✔ Container vigilante-bstracker Removed 0.0s
✔ Container covenant-emulator Removed 0.0s
✔ Container btc-staker Removed 0.0s
✔ Container babylondnode1 Removed 0.0s
✔ Container vigilante-reporter Removed 0.0s
✔ Container finality-provider1 Removed 0.0s
✔ Container finality-provider2 Removed 0.0s
✔ Container finality-provider0 Removed 0.0s
✔ Container bitcoindsim Removed 10.4s
✔ Container babylondnode0 Removed 0.0s
✔ Network artifacts_localnet Removed 0.3sDeploying the BTC Staking network through the make subcommand
start-deployment-btcstaking-bitcoind-demo leads to the execution of an
additional post-deployment script that showcases the
complete lifecycle of Babylon's BTC Staking protocol.
We will now analyze each step that is executed as part of the BTC Staking showcasing script - more specifically, how it is performed and its outcome for the Babylon and the BTC network respectively.
The Finality Providers have simnet BTC tokens staked to them. The Finality Providers that have staked tokens can submit finality signatures.
Through the Finality Provider's daemon logs we can verify the above (only 1 Finality Provider is included in all the example outputs in this section for simplicity):
$ docker logs -f finality-provider0
...
2025-01-30T14:14:22.040073Z info Successful transaction {"chain_id": "chain-test", "gas_used": 77319, "fees": "174339ubbn", "fee_payer": "\ufffd$\ufffd\ufffd\ufffdzk\ufffdif\ufffd\u000fcYrl\ufffd\ufffd\ufffd@", "height": 13, "msg_types": ["/babylon.btcstaking.v1.MsgCreateFinalityProvider"], "tx_hash": "188D3A0690E3DEDF078231226586B3AF6730657F04E007DF15226B2066A914B9"}
2025-01-30T14:14:22.040102Z info successfully registered finality-provider on babylon {"btc_pk": "84989a58a91314077679f3529601be9908381803d088e5fb0769af711b7ee49e", "fp_addr": "bbn1nvjwpqw00f46u6txsv8kxktjdjrd96zq64hkup", "txHash": "188D3A0690E3DEDF078231226586B3AF6730657F04E007DF15226B2066A914B9"}
2025-01-30T14:14:22.051044Z info successfully saved the finality-provider {"eots_pk": "84989a58a91314077679f3529601be9908381803d088e5fb0769af711b7ee49e", "addr": "bbn1nvjwpqw00f46u6txsv8kxktjdjrd96zq64hkup"}
2025-01-30T14:14:22.054427Z info determined poller starting height {"pk": "84989a58a91314077679f3529601be9908381803d088e5fb0769af711b7ee49e", "start_height": 39, "finality_activation_height": 39, "last_voted_height": 0, "last_finalized_height": 0, "highest_voted_height": 0}
2025-01-30T14:14:22.054485Z info starting the finality provider instance {"pk": "84989a58a91314077679f3529601be9908381803d088e5fb0769af711b7ee49e", "height": 39}
...As these Finality Providers don't have any BTC tokens staked to them, they cannot submit finality signatures at this point.
The Finality Providers are now periodically generating and submitting EOTS randomness to Babylon:
$ docker logs -f finality-provider0
...
2025-01-30T14:14:27.059040Z debug the finality-provider should commit randomness {"pk": "84989a58a91314077679f3529601be9908381803d088e5fb0769af711b7ee49e", "tip_height": 13, "last_committed_height": 0}
2025-01-30T14:14:32.594667Z info successfully committed public randomness to the consumer chain {"pk": "84989a58a91314077679f3529601be9908381803d088e5fb0769af711b7ee49e", "tx_hash": "FDC9E242D88FAF86214011996129D256930EAFE36A50182407342E1F03421F5F"}
...Next, one BTC staking request is sent to each Finality Provider through the BTC Staker daemon. Each request originates from a different BTC public key, and a 1-1 mapping between BTC public keys and Finality Providers is maintained.
Each request locks 1 million Satoshis from a simnet BTC address and stakes them to the Finality Provider, for several simnet BTC blocks (specifically, 500 blocks for the first 2 BTC public keys, and 10 blocks for the last BTC public key).
The following events are occurring here:
- The BTC Staker daemon creates a BTC staking transaction, signs it and sends it to the Babylon network for verification. The daemon also includes pre-signed unbonding and slashing transactions.
- The Covenant Emulator queries for delegations pending verification and spots this one; it verifies that all the transactions are in accordance with the BTC Staking Protocol and submits a verification on-chain
- The BTC Staker detects the verification and sends the staking transaction to the BTC Simnet
- The Vigilante BTC Staking Tracker starts tracking the staking transaction;
it is monitoring the BTC simnet until the staking transaction receives
Xconfirmations (in our case,X = 2) - The Vigilante BTC Staking Tracker submits the BTC inclusion proof to Babylon
- Babylon marks the BTC delegation as active
The delegation is now active, and the Finality Provider that received it will be eligible to submit finality signatures until the delegation expires (i.e. in 500 simnet BTC blocks). From Finality Provider daemon logs:
$ docker logs -f finality-provider0
...
time="2023-08-18T10:30:09Z" level=info msg="successfully submitted a finality signature to Babylon" babylon_pk_hex=0386b928eedab5e1f6dc7e4334651cca9c1f039589ac6fd14ece12df8e091a07d0 block_height=21 btc_pk_hex=1083b0c28491e9660cd252afa9fd36431e93a86adf21801533f365de265de4ba tx_hash=7BF8200BA71E640036141115AED2EE3D6E74682FDA72CD280722C0A2F06FE537
...Next, an attack to Babylon is initiated from one of the 3 Finality Providers. As attack is defined as a Finality Provider submitting a finality signature for a Babylon block hash at height X, while they have already submitted a finality signature for a different (i.e. conflicting) Babylon block hash at the same height X.
When the Finality Provider attacks Babylon, its Bitcoin private key is extracted
and exposed. The corresponding output of the make command looks like the
following:
Attack Babylon by submitting a conflicting finality signature for a finality provider
{
"tx_hash": "8F4951C848C59DF9C0EC95E42A3C690DDA8EF0B58DD10DF04038F8368BA8A098",
"extracted_sk_hex": "1034f95e93f70904fcf59db6acfa8782d3803056ff786b732a73dc298b6ca77b",
"local_sk_hex": "1034f95e93f70904fcf59db6acfa8782d3803056ff786b732a73dc298b6ca77b"
}
Finality Provider with Bitcoin public key 0386b928eedab5e1f6dc7e4334651cca9c1f039589ac6fd14ece12df8e091a07d0 submitted a conflicting finality signature for Babylon height 23; the Finality Provider's private BTC key has been extracted and the Finality Provider will now be slashedNow that the Finality Provider's private key has been exposed, the only remaining step is activating the BTC slashing transaction. This transaction will transfer a fraction of the BTC tokens staked to this Finality Provider to a simnet BTC burn address specified by the BTC Staking Protocol. The Vigilante BTC Staking Tracker daemon is responsible for this, and through its logs we can inspect this event:
$ docker logs -f vigilante-bstracker
...
2025-01-30T14:17:54.832918Z info new equivocating babylon finality provider 84989a58a91314077679f3529601be9908381803d088e5fb0769af711b7ee49e to be slashed {"module": "btcstaking-tracker", "module": "slasher"}
2025-01-30T14:17:54.833054Z info slashing finality provider 84989a58a91314077679f3529601be9908381803d088e5fb0769af711b7ee49e {"module": "btcstaking-tracker", "module": "slasher"}
2025-01-30T14:17:54.833082Z info start slashing finality provider 84989a58a91314077679f3529601be9908381803d088e5fb0769af711b7ee49e {"module": "btcstaking-tracker", "module": "slasher"}
2025-01-30T14:17:54.838431Z debug signed and assembled witness for slashing tx of unbonded BTC delegation b9888f79f98fdeefdf5ad2661b3cf2a4ce9c7e4b0cb9dd4026c57ef67bb114b9 under finality provider 84989a58a91314077679f3529601be9908381803d088e5fb0769af711b7ee49e {"module": "btcstaking-tracker", "module": "slasher"}
2025-01-30T14:17:54.840301Z info successfully submitted slashing tx (txHash: c695237f886d8ddc071bae211416e4e8b1f904fb7ab7ca5e3f58d6dab88deec6) for BTC delegation b9888f79f98fdeefdf5ad2661b3cf2a4ce9c7e4b0cb9dd4026c57ef67bb114b9 under finality provider 84989a58a91314077679f3529601be9908381803d088e5fb0769af711b7ee49e {"module": "btcstaking-tracker", "module": "slasher"}
2025-01-30T14:17:54.841256Z info successfully slash BTC delegation with staking tx hash 01000000019ad5af149e570aead3472fb2fe906e79fabad0467951be03331bf8768c539d880100000000ffffffff0240420f00000000002251208f322682bc76ddf09eeb926c3a8d80e97473f91b16932b9212bed59b557436e2cf788b3b00000000160014a2d7a25419c8e0952848c3136e95c8b4cb2e8cf300000000 under finality provider 84989a58a91314077679f3529601be9908381803d088e5fb0769af711b7ee49e {"module": "btcstaking-tracker", "module": "slasher"}
...The last BTC staking request that was placed by the BTC Staker daemon had a simnet BTC token time-lock of 10 BTC blocks. This is done on purpose, so that the staking period expires quickly and the withdrawal of expired BTC staked tokens can be demonstrated.
The final action of the showcasing script is to withdraw these BTC tokens. The BTC Staker daemon submits a simnet BTC transaction to this end - we can verify this through its logs:
$ docker logs -f btc-staker
...
time="2023-08-18T10:31:55Z" level=info msg="Successfully sent transaction spending staking output" destAddress=bcrt1qyrq6mayver4jj3rtluzjrz5338melpa57f35s0 fee="0.000025 BTC" spendTxHash=336b85d3d0b18dacdf962382714ab035d5d01e743d4d19678320e7ab272173d1 spendTxValue="0.009975 BTC" stakeValue="0.01 BTC" stakerAddress=bcrt1qyrq6mayver4jj3rtluzjrz5338melpa57f35s0
time="2023-08-18T10:32:24Z" level=info msg="BTC Staking transaction successfully spent and confirmed on BTC network" btcTxHash=223312387fa7d8448d642492d3fe3f1e2f9e23798b89ad13b6fc7ed74707e490
...After the transaction is confirmed on BTC simnet, the withdrawal of the BTC tokens is complete.
In this scenario, we demonstrate early unbonding and withdrawal of BTC tokens before the staking period elapses. The script first sends an early unbonding tx request. After waiting for the staking tx to be expired a withdrawal request is then submitted to retrieve the staked BTC.
$ docker logs -f btc-staker
...
time="2024-06-13T11:22:56Z" level=debug msg="Unbonding transaction received confirmation" confLeft=0 unbondingTxHash=9190dfbb6e8071f05a0abc96ea51f21972f76b86c78e6be0a3002f983e5b2665
time="2024-06-13T11:22:56Z" level=debug msg="Unbonding tx confirmed" blockHash=59a57a822b53679984dae86f8345877f01c6f53f30a1a3f317670b8b270bec6c blockHeight=143 stakingTxHash=da508826931228a1143e66667778d945161c73ebb0222d951a762028f2e94bb0 unbondingTxHash=9190dfbb6e8071f05a0abc96ea51f21972f76b86c78e6be0a3002f983e5b2665
time="2024-06-13T11:26:10Z" level=debug msg="Received staking event" event=SPEND_STAKE_TX_CONFIRMED_ON_BTC eventId=da508826931228a1143e66667778d945161c73ebb0222d951a762028f2e94bb0
time="2024-06-13T11:26:10Z" level=debug msg="Processed staking event" event=SPEND_STAKE_TX_CONFIRMED_ON_BTC eventId=da508826931228a1143e66667778d945161c73ebb0222d951a762028f2e94bb0
...After the transaction is confirmed on BTC simnet, the processing of the early unbonding is finished.