Document sBTC Mini

[netrome]

Definition of Done

We have an explanation of what sBTC Mini is, why it is being created, and the technical/economic differences between it and full sBTC.

[friedger]

Sbtc mini is a decentralized stacking pool on stacks 2.4 that distributes rewards in sBTC.

In Stacks 2.4, only this stacking pool contract can mint and burn sBTC. That means sBTC is secured by the locked stx in the stacking pool.

The stacking pool can have at most 100 members. It is active only if the stacked amount is 1m STX or more. The minimum required locking amount for pool members is 10k stx.

Pool members are responsible managing a bitcoin wallet that backs sBTC. They are responsible for handling deposits and withdrawals of bitcoin to and from the wallet as described on the sBTC page with the following exceptions:

• btc withdrawal requests can only be submitted as a stacks tx.
• if the pool is not active, sbtc is frozen sbtc deposit/withdrawl is frozen until the pool is reactivated.

[netrome]

if the pool is not active, sbtc is frozen until the pool is reactivated.

I assume holders of sBTC will still be able to transfer sBTC and use the token - and just the ability to withdraw/deposit is frozen right?

[friedger]

@netrome Yes, correct. I'll update my comment.

Do you have a different/better proposal what happens if the pool is not active? The punishment is stopped as well.

[netrome]

Do you have a different/better proposal what happens if the pool is not active? The punishment is stopped as well.

I don't follow what "the punishment is stopped" means. Does mini have a means of penalizing signers if they don't fulfill their duties - beyond keeping their STX locked? I mean, they would still receive their BTC rewards right?

[friedger]

@netrome Stackers can drop out by revoking (the permission for the pool admin to extend locking), therefore, their STX can't be kept locked. Once they STX is not locked anymore, they won't receive any BTC rewards any more.

I don't understand the reward distribution algorithm yet, maybe we can make it so that the BTC rewards are frozen when the pool is not active.

[netrome]

I don't understand the reward distribution algorithm yet, maybe we can make it so that the BTC rewards are frozen when the pool is not active.

The BTC rewards are controlled by PoX consensus, and I'd assume that any changes there would be consensus breaking and therefore not in scope for Mini.

Then it sounds like we don't have any means to economically incentivize stackers to behave in Mini, which is along the lines of what I've heard before. We're relying on them to be benevolent.

[friedger]

BTC rewards are collected in the peg wallet (what is the new name for it?) and distributed like in any stacking pool proportionally to the stacked stx of each stacker.

We could deactivate the distribution if the pool is inactive the next cycle.

[netrome]

BTC rewards are collected in the peg wallet (what is the new name for it?) and distributed like in any stacking pool proportionally to the stacked stx of each stacker.

We could deactivate the distribution if the pool is inactive the next cycle.

sBTC wallet is the term used in the docs nowadays.

Who would deactivate the BTC reward distribution? Is that governed by the smart contract? Since anyone can just drop out of the pool I don't see a big benefit of this addition.

[friedger]

Isn't the flow

1. Join
2. Vote
3. Transfer
4. Audit
5. Get rewards

If you leave early, you don't get rewards for the current cycle.

If you misbehave, you don't get rewards for the upcoming cycle and your locking is extended.

Therfore, the punishment comes before the rewards.

The rewards for the punished cycle could be used to pay interest for the failed withdrawals.

[friedger]

Oh, I see the rewards can be distributed earlier because it is on bitcoin.

[netrome]

Yeah, 2. 3. and 4. is happening independent of 5. Also, how does the reward deactivation work? Would the entire pool be cut out from getting BTC rewards and how does that work?

The biggest sBTC risk would be the signers all colluding together to steal the sBTC wallet BTC, and as I understand it we can't penalize them proportionally if they do so in 0.1. Therefore 0.1 relies on the assumption that signers are benevolent and play nice.

[friedger]

Yes, you are correct

[netrome]

Thank you for confirming 🙏

[friedger]

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