Skip to main content

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.

The weight of a signer'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.

Becoming A Signer​

To become a signer in the FROST threshold signature group, a user must stake dxFROST tokens, which are the liquidity provider (LP) tokens for the FROST/frBTC pool on a decentralized exchange.

dxFROST is a yield-bearing, liquid staking token that a user receives when they stake their FROST and frBTC.

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.

This opportunity is not currently available to the public, but explained in Phase 2 on the frBTC - Roadmap page.

Security & Incentives​

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

  • Incentives: Signers are rewarded for their participation with a share of the protocol'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.

This staking mechanism provides several benefits:

  • Economic Security: 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 protocol.
  • Liquidity: The staking requirement ensures that there is always a deep pool of liquidity for the FROST/frBTC trading pair, which is essential for the health of the ecosystem.
  • Alignment of Incentives: By requiring signers to hold both FROST and frBTC, it ensures that they are invested in the long-term success of the entire SUBFROST protocol.

Through its roles in governance, value accrual, and security, the FROST token is an integral part of the SUBFROST protocol, ensuring its sustainability and growth. Learn more on the FROST token page.