Context

In the reference design of BTC staking integration, consumers need to deploy Babylon contracts that manage finality providers, BTC delegations, and finality signatures, and install the Babylon SDK to support on-chain tallying of these finality signatures.

While this design minimises changes required from the consumer system, it is still not feasible for systems without smart contracts or for those that do not want to change their codebase for Babylon integration.

This document proposes an alternative BTC staking integration design that does not require any changes or smart contract deployments on the consumer side, particularly focusing on Cosmos SDK chains. The new approach achieves this by:

• Shifting the responsibility for data availability from consumers to Babylon.
• Moving the task of verifying finality signatures from consumers to users or backend services.

Design goals

We envision a BTC staking design that satisfies the following requirements:

• End users can verify that the consumer gets Bitcoin security from BTC staking.
• Consumer does not need to change any code.
• Consumer does not need to host any smart contracts.

A design satisfying these requirements can apply to any system that has discrete historical system states, regardless of whether it’s a blockchain or not, or whether the system is centralised / decentralised, etc.

The proposal

The high-level idea of this proposal is to move the data availability (DA) of finality signatures from consumers to smart contracts on Babylon, and to move the task of tallying finality signatures from consumers to users (or backend services).

System components

The design involves the following components:

• Data availability (DA) contract on Babylon: maintaining all finality signatures submitted from finality providers.
• Consumer finality provider: registering to a Babylon node, and submitting finality signatures to the DA contract.
  • It connects to a Babylon node for querying voting power of itself, connects to DA contract in the Babylon node for submitting finality signatures, and connects to the consumer chain to get block metadata.
• Babylon finality gadget: tallying finality signatures and determining finalisation status of blocks.
  • It connects to a Babylon node for querying voting power of finality providers, connects to DA contract in the Babylon node for querying finality signatures, and connects to the consumer chain to get block metadata.
  • (Optional) It connects to a Bitcoin node to ensure the BTC light client in Babylon is consistent with the Bitcoin network.