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This is the BTC staking integration 1-pager for Cosmos chains. The 1-pager for OP stack L2s can be found here.

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Context

Babylon provides the Bitcoin staking protocol that allows Bitcoin holders to stake their BTCs natively on the Bitcoin chain to protect any PoS chains. The staking is trustless in the sense that the BTC resides in a self-custodian vault on the native Bitcoin network, without being bridged elsewhere.

Cosmos chains can integrate with Babylon to get security from BTC stake. This is made more important for new Cosmos chains with less staking TVL. In addition, the staked BTC achieves slashable safety, a strong security property that equivocations by BTC-backed finality providers are held accountable and their BTC stake is slashable, even when equivocating finality providers constitute a majority.

System architecture

The following figure depicts the system architecture. The “→” arrow denotes data flow; for example, X→ Y means “Y queries data from X and the data flows from X to Y”.

The design involves the following main components:

• Finality provider: a daemon program that receives BTC stake and keeps submitting finality signatures over blocks to the consumer chain.
• Babylon contracts: a set of CosmWasm smart contracts that maintains IBC channels with Babylon and handles finality signatures submitted from finality providers
• Babylon-SDK: a small Cosmos SDK module serving as a thin layer between Babylon contracts and Cosmos SDK level of the consumer chain.

Implementation

We have finished the reference implementation. The codebases include:

• babylon: Babylon node with BTC staking integration support to Cosmos chains.
• finality-provider: The finality provider program
• btc-staker: The BTC staker program
• babylon-contract: The CosmWasm contracts deployed on the consumer chain for integration.
• babylon-sdk: The Cosmos SDK module serving as a thin layer between Babylon contracts and Cosmos SDK level of the consumer chain

Local deployments