create-phase1-staking.md

Creating and Submitting phase-1 Staking Transactions

The phase-1 staking transaction is a Bitcoin Staking transaction that includes an additional OP_RETURN field containing the staking parameters to enable for easy identification and taproot decoding through observing the Bitcoin ledger.

In this document, we will be exploring how to build the phase-1 staking transaction using a bitcoind wallet, and later funding, signing, and propagating it to the BTC network.

Requirements

• stakercli
• bitcoin-cli
• jq

The generation of a phase-1 staking transaction does not require an active stakerd daemon that connects to a Babylon node. It can be generated in offline mode without any external connections.

It only requires the specification of a funding Bitcoin public key. Wallet creation and generating a Bitcoin address for it are covered by this guide (steps 2 to 2.4). You can generate a new address by running the following command bitcoin-cli getnewaddress.

bitcoin-cli -signet \
  -rpcuser=<your_rpc_username> \
  -rpcpassword=<your_rpc_password> \
  -rpcport=38332 \
  -rpcwallet=btc-staker \
  getnewaddress

tb1q9hr5zxsvtzg3gxpewdc7ft9yam2c6cfeaz75jj

Identifying the Staker Public Key

A Bitcoin staking transaction requires the specification of the staker public key, which corresponds to the public key of the wallet that is funding the staking transaction. Once you setup your wallet and an address for it, you can extract the public key corresponding to it through the bitcoin-cli getaddressinfo. The output should be a json structure with information about the generated address:

bitcoin-cli -signet \
  -rpcuser=<your_rpc_username> \
  -rpcpassword=<your_rpc_password> \
  -rpcport=38332 \
  -rpcwallet=btc-staker \
  getaddressinfo tb1q9hr5zxsvtzg3gxpewdc7ft9yam2c6cfeaz75jj

{
  "address": "tb1q9hr5zxsvtzg3gxpewdc7ft9yam2c6cfeaz75jj",
  "scriptPubKey": "00142dc7411a0c58911418397371e4aca4eed58d6139",
  "ismine": true,
  "solvable": true,
  "desc": "wpkh([40009876/0h/0h/0h]032dedbb66510d56b11f7a611e290f044e24dd48fd9c8a76d103ba05c8e95f3558)#rneryczc",
  "iswatchonly": false,
  "isscript": false,
  "iswitness": true,
  "witness_version": 0,
  "witness_program": "2dc7411a0c58911418397371e4aca4eed58d6139",
  "pubkey": "032dedbb66510d56b11f7a611e290f044e24dd48fd9c8a76d103ba05c8e95f3558",
  "ischange": false,
  "timestamp": 1714999109,
  "hdkeypath": "m/0'/0'/0'",
  "hdseedid": "85e1a0d49dfa38c18a8a61ae7b2f2daa366fdcb3",
  "hdmasterfingerprint": "40009876",
  "labels": [
    ""
  ]
}

The BTC staker public key as hex can be derived from the pubkey property. You can use the jq utility to reduce it as follows:

bitcoin-cli -signet \
  -rpcuser=<your_rpc_username> \
  -rpcpassword=<your_rpc_password> \
  -rpcport=38332 \
  -rpcwallet=btc-staker \
  getaddressinfo <addr> | jq -r '.pubkey[2:]'

2dedbb66510d56b11f7a611e290f044e24dd48fd9c8a76d103ba05c8e95f3558

In this example the value 2dedbb66510d56b11f7a611e290f044e24dd48fd9c8a76d103ba05c8e95f3558 is the BTC staker public key in hex format.

Create Raw Transaction

The binary stakercli will be used to generate the transaction using the transaction create-phase1-staking-transaction command.

This command has several flag options:

• --staker-pk Schnorr BTC staker public key in hex format.
• --finality-provider-pk The finality provider Schnorr BTC public key in hex format.
• --staking-amount The amount of satoshis to be locked.
• --staking-time The amount of BTC blocks to lock for.
• --magic-bytes Magic bytes in op_return output in hex.
• --covenant-committee-pks BTC public keys of the covenant committee. For each covenant pub key specified, the flag needs to be used again.
• --covenant-quorum Required quorum of covenant members to unbond.
• --network Specifies the BTC network this transaction will be sent, any of [mainnet, testnet3, regtest, simnet, signet].

For example to generate one staking transaction that locks 0.05 BTC for one year, use --staking-amount=5000000 and --staking-time=52560.

stakercli transaction create-phase1-staking-transaction \
  --staker-pk 2dedbb66510d56b11f7a611e290f044e24dd48fd9c8a76d103ba05c8e95f3558
  --staking-amount 5000000 --staking-time 52560 \
  --magic-bytes <bbn_4byte_identifier> \
  --finality-provider-pk <fp_pk_chosen> \
  --covenant-quorum 3 \
  --covenant-committee-pks 05149a0c7a95320adf210e47bca8b363b7bd966be86be6392dd6cf4f96995869 \
  --covenant-committee-pks e8d503cb52715249f32f3ee79cee88dfd48c2565cb0c79cf9640d291f46fd518 \
  --covenant-committee-pks fe81b2409a32ddfd8ec1556557e8dd949b6e4fd37047523cb7f5fefca283d542 \
  --covenant-committee-pks bc4a1ff485d7b44faeec320b81ad31c3cad4d097813c21fcf382b4305e4cfc82 \
  --covenant-committee-pks 001e50601a4a1c003716d7a1ee7fe25e26e55e24e909b3642edb60d30e3c40c1 \
  --network signet

{
  "staking_tx_hex": "020000000002404b4c00000000002251204a4b057a9fa0510ccdce480fdac5a3cd12329993bac2517afb784a64d11fc1b40000000000000000496a4762627434002dedbb66510d56b11f7a611e290f044e24dd48fd9c8a76d103ba05c8e95f3558a89e7caf57360bc8b791df72abc3fb6d2ddc0e06e171c9f17c4ea1299e677565cd5000000000"
}

Fund Raw Transaction

The generated raw transaction needs to be funded. To fund a transaction run bitcoin-cli fundrawtransaction that adds inputs to a transaction until it has enough value to satisfy the transaction.

bitcoin-cli -signet \
  -rpcuser=<your_rpc_username> \
  -rpcpassword=<your_rpc_password> \
  -rpcport=38332 \
  -rpcwallet=btc-staker \
  fundrawtransaction 020000000002404b4c00000000002251204a4b057a9fa0510ccdce480fdac5a3cd12329993bac2517afb784a64d11fc1b40000000000000000496a4762627434002dedbb66510d56b11f7a611e290f044e24dd48fd9c8a76d103ba05c8e95f3558a89e7caf57360bc8b791df72abc3fb6d2ddc0e06e171c9f17c4ea1299e677565cd5000000000

{
  "hex": "0200000001b8eba8646e5fdb240af853d52c37b6159984c34bebb55c6097c4f0d276e536c80000000000fdffffff0344770d000000000016001461e09f8a6e653c6bdec644874dc119be1b60f27a404b4c00000000002251204a4b057a9fa0510ccdce480fdac5a3cd12329993bac2517afb784a64d11fc1b40000000000000000496a4762627434002dedbb66510d56b11f7a611e290f044e24dd48fd9c8a76d103ba05c8e95f3558a89e7caf57360bc8b791df72abc3fb6d2ddc0e06e171c9f17c4ea1299e677565cd5000000000",
  "fee": 0.00117500,
  "changepos": 0
}

You might need to unlock the wallet with bitcoin-cli walletpassphrase

Sign Transaction

For the transaction to be submitted to the BTC network it first needs to be signed. You can sign the raw funded transaction and output the signed format as hex using the bitcoin-cli signrawtransactionwithwallet command.

bitcoin-cli -signet \
  -rpcuser=<your_rpc_username> \
  -rpcpassword=<your_rpc_password> \
  -rpcport=38332 \
  -rpcwallet=btc-staker \
  signrawtransactionwithwallet 0200000001b8eba8646e5fdb240af853d52c37b6159984c34bebb55c6097c4f0d276e536c80000000000fdffffff0344770d000000000016001461e09f8a6e653c6bdec644874dc119be1b60f27a404b4c00000000002251204a4b057a9fa0510ccdce480fdac5a3cd12329993bac2517afb784a64d11fc1b40000000000000000496a4762627434002dedbb66510d56b11f7a611e290f044e24dd48fd9c8a76d103ba05c8e95f3558a89e7caf57360bc8b791df72abc3fb6d2ddc0e06e171c9f17c4ea1299e677565cd5000000000

{
  "hex": "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",
  "complete": true
}

The output gives out the signed funded self-lock transaction in the hex property.

Submit Transaction

The signed transaction can be submited onchain to BTC to be included in the blocks. You can submit a transaction through the bitcoin-cli sendrawtransaction that propagates the signed transaction to other nodes.

bitcoin-cli -signet \
  -rpcuser=<your_rpc_username> \
  -rpcpassword=<your_rpc_password> \
  -rpcport=38332 \
  sendrawtransaction 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

e87cfd1bb8aaaa009acee0ed0c5a8bed4995c8d7bc34498031ae4dc2feb8ba41

It outputs the transaction hash. Wait a few minutes and make sure that the transaction is included in the blockchain by using a Bitcoin explorer or running the following command bitcoin-cli gettransaction.

bitcoin-cli -signet \
  -rpcuser=<your_rpc_username> \
  -rpcpassword=<your_rpc_password> \
  -rpcport=38332 \
  gettransaction e87cfd1bb8aaaa009acee0ed0c5a8bed4995c8d7bc34498031ae4dc2feb8ba41

{
  "amount": -0.05000000,
  "fee": -0.00117500,
  "confirmations": 2,
  "blockhash": "0000001779eb0be0537a3152ed8ced6dbf2e113617f0500c61c2db230df50f8b",
  "blockheight": 194352,
  "blockindex": 1,
  "blocktime": 1715001364,
  "txid": "e87cfd1bb8aaaa009acee0ed0c5a8bed4995c8d7bc34498031ae4dc2feb8ba41",
  "wtxid": "040de8ed63d6f7ab9d234bb203d2e26e5e46801c9a1fc5af62acbbd75c547602",
  "walletconflicts": [
  ],
  "time": 1715001117,
  "timereceived": 1715001117,
  "bip125-replaceable": "no",
  "details": [
    {
      "address": "tb1pff9s275l5pgsenwwfq8a43dre5fr9xvnhtp9z7hm0p9xf5glcx6q4ffjtg",
      "category": "send",
      "amount": -0.05000000,
      "vout": 1,
      "fee": -0.00117500,
      "abandoned": false
    },
    {
      "category": "send",
      "amount": 0.00000000,
      "vout": 2,
      "fee": -0.00117500,
      "abandoned": false
    }
  ],
  "hex": "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",
  "lastprocessedblock": {
    "hash": "0000002afc7a3021b17967acf3d8a90af69023cc48383230dd29e782daf0ebdf",
    "height": 194353
  }
}