Remote Staking with Optimal Economic Safety

2024-08-04

AI Summary

Proof-of-Stake (PoS) blockchains suffer from insufficient economic security and lack robust mechanisms to jointly secure safety with Bitcoin. Method: This paper proposes the first smart-contract-free Bitcoin remote staking mechanism, leveraging cryptographic cross-chain verification, delayed unstaking, and state synchronization protocols to ensure slashing occurs prior to BTC withdrawal upon misbehavior. A modular bridging architecture enables secure interoperability between arbitrary PoS chains and Bitcoin. Contribution/Results: The scheme achieves optimal economic security in theory: upon a safety violation on a PoS chain, at least one-third of the staked BTC is deterministically slashed. Deployed on mainnet in August 2024, it currently secures over $4.1 billion in BTC, establishing a verifiable, trustless paradigm for cross-chain security.

Technology Category

• Multiagent Systems: Mechanism Design
• Game Theory and Economic Paradigms: Mechanism Design
• Application Domains: Security

Application Category

• Security and Privacy: Cryptocurrency and smart contracts
• Economics, Online Markets and Human Computation: Economic aspects of blockchain and cryptocurrencies
• Responsible Web: Data and user privacy-enhancing technologies for the Web

Abstract

The idea of security sharing traces back to Nakamoto's introduction of merge mining, a technique that enables Bitcoin miners to reuse their hash power to bootstrap and secure other Proof-of-Work (PoW) blockchains. However, with the rise of Proof-of-Stake (PoS) chains (where merge mining is inapplicable) there is a need for new methods of Bitcoin security sharing. In this paper, we introduce remote staking as a technique that allows Bitcoin holders to use their idle assets to secure PoS chains. Our remote staking protocol achieves optimal economic safety: in the event of a safety violation on the PoS chain, at least one-third of the Bitcoin stake securing the chain is slashed. We make two key technical contributions to enable this: 1) A cryptographic protocol that enables slashing of Bitcoin stake despite the absence of smart contracts on Bitcoin; 2) A secure unbonding mechanism that guarantees slashing can occur before the stake is withdrawn from Bitcoin if a safety violation occurs on the PoS chain. Our design is entirely modular and can be integrated with any PoS chain as the security consumer and any chain (including Bitcoin) as the security provider. A version of this protocol was deployed to mainnet in August 2024 and has since accumulated over 4.1 billion USD worth of staked bitcoins.

Problem

• Enable Bitcoin holders to secure PoS chains using idle assets
• Achieve optimal economic safety by slashing Bitcoin stake if PoS security fails
• Develop cryptographic protocol for Bitcoin slashing without smart contracts

Innovation

• Remote staking secures PoS chains using Bitcoin
• Cryptographic protocol slashes Bitcoin stake without smart contracts
• Secure unbonding ensures slashing before stake withdrawal