💎 tBTC Network: the first and the only trustless BTC to ETH bridge ↗️↖️

tBTC is definitely a great mechanism and I truly love it and using pretty often. I like to be among the first users of something new and great. And I guess you already have read that my long tBTC dApp user guide and tried to mint some TBTC token too, right? But do you know how exactly the whole process is happening? I might assume you don't. And this is not a problem at all, because the dApp was designed in such a way when you don't need to know all of the nuances for using it easily and smoothly. And this is cool, and how all dApps must be designed. But despite it is a really simple and intuitive one I'm going to tell you a bit more about what is happening behind the scene, core features and technologies, and who is operating the processes further here. So let's go.

First of all, TBTC is an ERC-20 token on the Ethereum network. It is fully backed by BTC, in a 1-to-1 ratio, and is pegged to its supply, but not to the price. The tBTC decentralized application is a joint open-source project of Keep, Summa, and the Cross-Chain Group that enables Bitcoin holders to deposit their BTC and mint TBTC in return, which in turn gives them access to almost the entire ecosystem of decentralized finance (DeFi), which in its vast majority is built on the Ethereum blockchain. The development and launch of the tBTC application is supported by more than 75% of DeFi projects, which gives to the token holders almost unlimited opportunities for its use.

Each TBTC token is fully collateralized and corresponds to at least 1 BTC held in reserve. The tBTC application is a trustless one and uses the Random Beacon - core Keep Network application, to randomly select signers from a general pool according to admission requirements. These signers are responsible for the BTC contributed by the user, right up to the moment of its redeeming. At the same time, each of them stores only a part of the private key to the BTC wallet which they generated earlier and which is storing the user's BTC. And none of them can independently receive this BTC, or decode any other information obtained during the minting process and stored by them.

Converting BTC to TBTC, and vice versa, is available to users at any time convenient to them, since the network of nodes that serve this system is online 24/7 and is carefully monitored and maintained by operators. At the same time, the TBTC minting process does not require the involvement of any third parties or service providers. All you need to mint TBTC is to have BTC on your balance and access to the dapp.tbtc.network application, which you can connect to using both the Metamask extension and wallets for cold storage, Ledger or Trezor.

It is also worth noting that the TBTC token has a graduated maximum supply structure, starting at 2 TBTC in the first 48 hours after application deployment. The supply cap will then increase to 100 TBTC for the remainder of the first week and then increase to 250 TBTC a week later.

(By the way, today is this day when the supply cap will be increased already to 500 TBTC, and the Tuesday is the day when it will be increasing further weekly)

The supply limit will increase by 250 TBTC every week until it reaches 1000 TBTC. Thereafter, the increase will be 500 TBTC each week until it reaches 3000 TBTC nine weeks after the launch. Then finally, after a week, the supply limit will be increased to 21 million TBTC which is equal to the total supply of Bitcoin.

Also, the TBTC system uses some unique developments like TDT ID, the previously mentioned Keep Random Beacon application, lot system, and threshold signatures. And I would like to tell you a bit more about each of them further.

TDT or TBTC Deposit Token

TDT is an NFT ERC-721 token that is generated when a user requests a deposit, and it is the equivalent of TBTC. It represents the ownership of the UTXO deposit on the Bitcoin blockchain. TDT and TBTC are interchangeable.

TBTC deposits can be blocked and unblocked. A blocked deposit can only be redeemed by the owner of the deposit with the corresponding TDT, which is unique to the individual deposit and has the exclusive right to redeem that deposit for up to 6 months. Once the deposit is fully verified by SPV Relay, the TDT holder can request a redemption. After paying commissions, he will dispose of the UTXO, which corresponds to the deposit in the Bitcoin network. TDT is required to redeem a blocked BTC deposit. You cannot get your BTC back if you haven't the TDT.

Lots

tBTC dApp uses a deposit lot system. In order to make the system efficient and manageable, the Keep team decided to use lots of fixed sizes. If a contributor wants to deposit more BTC than is supported by the existing lot sizes, he must create multiple deposit requests. This allows different groups of signers to sign each individual deposit, which at the same time makes it easier to link groups of signers and isolates the entire system from isolated attacks on groups of signers or their misconduct.

To the moment there are these lots available: 0.01BTC, 0.1BTC, 0.2BTC, 0.5BTC, 1BTC, 5BTC ,10 BTC. And the team plans to add bigger lots later.

Note: To prevent the loss of funds, users must be careful and send only that amount of their BTC to the dApp that is corresponding to the lot they have chosen.

Random Beacon

The Keep Network needed a reliable source of randomness to select signers. And they built their core decentralized application ⎯ Random Beacon. When a request is received to create a group of signers, the tBTC system uses the Random Beacon dApp for this, or rather a random seed from it, and then the signers are selected using it. Next, the selected signers use a key generation protocol that outputs an ECDSA public key. The resulting key is used to generate a wallet address, which is then published on the chain. This completes the stage of selecting signers.

Threshold signatures

tBTC uses threshold signatures to generate keys. Threshold signatures allow a group of signers to create a single public key from a private key split into multiple parts. Such signatures allow a subset of signers to create a signature on behalf of the entire group of signers. This allows for achieving a decent level of security without using standard multi-signatures.

Threshold signatures have the following benefits:
• It is easier to create a group of signers.
• You may not trust any member of the group.
• Resistance to the fact that almost half of the group is in bad faith or unable to generate a key.

tBTC signer groups are the network node operators. Each group consists of three nodes, and all three of them are required to generate a signature. Any opportunity to manipulate the set of signers is neutralized by the KEEP staking model, which provides resistance to Sybil attacks.

To guarantee users compensation in the event of fraud, signers provide collateral in ETH of 150% of the depositing BTC. tBTC monitors the bad faith behavior of signers, punishing them and fully reimbursing the user for their TBTC, and also excludes the malicious signer from the pool.

So, the process of creating 1 TBTC is as follows:

1. ECDSA keep makes a request to the Keep network for a 1 BTC deposit.
2. A group of signatories is formed, and the collateral in ETH in the amount of 150% of the cost of 1 BTC is taken from them.
3. The group of signers generates a Bitcoin key (wallet) using the ECDSA Threshold Signature Protocol.
4. The user transfers 1 BTC to the generated Bitcoin wallet.
5. The user generates SPV proof of his transaction and sends it to the Ethereum network.
6. User receives TBTC.

Exchange TBTC back to BTC is similar to the above, but in the opposite direction:

1. The user burns TBTC and indicates his Bitcoin address.
2. A group of signatories generates and publishes a transaction signature and sends BTC to the specified Bitcoin address.
3. The user sends this transaction to the network.
4. Signers generate SPV proof of this transaction, publish it on the Ethereum network, and receive their collateral back.

Parties involved in this process:

1. Keep Network, which provides signers to create a wallet and store BTC.
2. A network of oracles of the BTC value for calculating the amount of collateral in the ETH.
   3.Bitcoin relay that validates TBTC creation and burn transactions.
3. The user himself.

tBTC uses secure ETH / BTC pricing based on MakerDAO oracles that pull the average price from Binance, HitBTC, Coinbase, Poloniex, Huobi, and Bitfinex.

Of course, the tBTC system is not the first BTC to ETH bridge, but it is definitely a unique, reliable and fully decentralized system. It is a non-custodial and trustless bridge, the launch of which is supported by approximately 50 DeFi ecosystem projects. Most of them you all know very well.

And the code of the system has already gone through the three deep code audits, and all of them were positive. By the way, the Keep Network team plans to conduct such audits regularly and the next one has already started. It is that one that will ensure all of us that we can stake our ETHs only within the Keep StakeDrop event in a completely safe way, and earn KEEPS and signer fees.

Now I hope you know a bit more about tBTC dApp system and are interested to use it even more than earlier. But don't forget to monitor the project's official links and chat to get updates. And ping me in discord if you have a question or suggestion, my username is: alterkahn#1033

Keep Network website, tBTC website, tBTC dApp, tBTC Yellow Paper, Keep Network GitHub, Messari transparency page, Keep Blog, Staking documentation, tBTC mainnet contract on Etherscan, KEEP on CoinGecko, Keep Twitter, tBTC Twitter, Telegram, Reddit, Keep Discord, tBTC Discord.