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SUBFROST Proof-of-Stake

SUBFROST is secured by a Proof-of-Stake (PoS) consensus mechanism where our network participants, known as signers, stake FROST and frBTC, to gain the right to participate in consensus. This economic stake incentivizes signers to act honestly and maintain the integrity of the network.

The Role of Signers​

Signers are responsible for:

  • Validating Transactions: Verifying the validity of transactions and state changes proposed by other signers.
  • Securing the Peg: Participating in the FROST threshold signature scheme to sign for the release of BTC during the unwrapping process.

To become a signer, a user must acquire and stake both FROST and frBTC tokens. The weight of a signers's influence in the consensus process (e.g., their probability of being chosen to propose a transaction) is proportional to the amount they have staked.

Tokens and Staking​

The PoS system revolves around two primary tokens:

  1. FROST: The native governance and staking token of the SUBFROST protocol.
  2. dxFROST: A yield-bearing, liquid staking token that a user recieves when they stake their FROST and frBTC.

Note that dxFROST automatically accrues staking rewards and can be freely traded or used in other DeFi applications while the underlying FROST and frBTC remain staked, providing capital efficiency.

Economic Security​

The PoS mechanism provides economic security to the network in several ways:

  • Incentives: Signers are rewarded for their participation with a share of the network's transaction fees. This provides a strong financial incentive to operate a node reliably and honestly.
  • Slashing: If a signer acts maliciously (e.g., by trying to double-spend or by signing a fraudulent transaction), their staked FROST and frBTC can be "slashed", meaning a portion of it is seized and burned. This threat of financial loss is a powerful deterrent against attacks.

By requiring signers to have a significant economic stake in the system, the PoS model aligns their interests with the long-term health and security of the network.