The Babylon system is composed of a Babylon node
built using the Cosmos SDK as well as peripheral programs
that facilitate BTC staking, finality round participation, and
communication with Bitcoin and other Consumer Zones.
The Babylon blockchain is divided into epochs that consist of a parameterized number of blocks. Within each epoch, the validator set does not change. This way, Babylon needs a checkpoint per epoch rather than per block, which reduces the checkpointing costs. The epoching module achieves this by delaying the execution of transactions that affect the validator set to the last block of each epoch.
The BTC Light Client module receives Bitcoin headers reported by the Vigilante Reporter and maintains a BTC header chain based on the PoW rules of Bitcoin. It exposes information about the canonical Bitcoin chain, the depth of headers, and whether the inclusion evidence for a Bitcoin transaction is valid.
The BTC Checkpoint module verifies Babylon’s BTC checkpoints reported by the Vigilante Reporter, and provides the confirmation status of these checkpoints to the Checkpointing module based on their depth according to the BTC Light Client module.
The checkpointing module is responsible for creating Babylon checkpoints to be submitted to Bitcoin and maintaining their confirmation status. It collects the validator's BLS signatures for each block to be checkpointed and aggregates them into a BLS multisignature to include in the Bitcoin checkpoint. The confirmation status of each checkpoint is determined by Bitcoin checkpoint inclusion information retrieved from the BTC checkpoint module.
The Zone Concierge module extracts verified Consumer Zone headers from connected IBC light clients and maintains their Bitcoin confirmation status based on the Bitcoin confirmation status of the Babylon transactions that carry them. It communicates the Bitcoin confirmation status to the Consumer Zone using verifiable proofs through an IBC connection.
The BTC Staking module is the bookkeeper for the BTC staking protocol. It is responsible for verifying and activating BTC staking requests and maintaining the active finality provider set. It communicates with the BTC Light Client module to extract the confirmation status of staking requests and receives notifications about on-demand unlocked stake from the BTC Staking Monitor.
The Finality module is responsible for finalizing blocks produced by the CometBFT consensus. It receives and verifies finality round votes from finality providers and a block is considered finalized if sufficient voting power is cast on it. The voting power of each finality provider is based on its Bitcoin stake retrieved from the BTC Staking module. Finality votes are performed using Extractable-One-Time-Signatures (EOTS) and verified using the finality providers' committed public randomness.
The incentive module consumes a percentage of the rewards intended for Babylon stakers and distributes it as rewards to Bitcoin stakers and vigilantes.
The vigilante suite of programs acts as a relayer of data between Babylon and Bitcoin. Babylon's secure operation requires that at least one honest operator of each of the programs exist. Otherwise, an alarm will be raised by the monitor program.
A standalone program that submits
Babylon checkpoints to Bitcoin as
Bitcoin transactions embedding data
utilising the OP_RETURN Bitcoin script code.
A standalone program that scans the Bitcoin ledger for Bitcoin headers and Babylon checkpoints, and reports them back to Babylon using Babylon transactions.
The monitor programs suite is responsible for monitoring the consistency between Babylon's state and Bitcoin.
A standalone program that monitors:
- The consistency between the Bitcoin canonical chain and the Bitcoin header chain maintained by Babylon's BTC Light client module.
- The timely inclusion of Babylon's Bitcoin checkpoints information in the Babylon ledger.
A standalone program that monitors:
- The execution of BTC Staking on-demand unbonding transactions on the Bitcoin ledger to inform Babylon about them.
- The execution of BTC Staking slashing transactions in the case of a finality provider double voting. In the case of non-execution the monitor extracts the finality provider's private key and executes the slashing.
- The execution of a selective slashing attack launched by a finality provider. In this case, the monitor extracts the finality provider's private key and slashes them.
The BTC Staking programs suite involves components that enable the function Bitcoin Stakers and Finality Providers while also ensuring their adherence to the protocol.
Bitcoin holders can stake their Bitcoin by creating a set of Bitcoin transactions, including them to the Bitcoin ledger, and then informing Babylon about their staking. Later, they can also on-demand unlock or withdraw their funds when their stake expires. The following set of standalone programs has been developed to enable these functionalities:
- BTC Staker Daemon: Daemon program connecting to a Bitcoin wallet and Babylon.
- BTC Staker Dashboard: Web application connecting to a Bitcoin wallet extension and the Babylon API. Should only be used for testing purposes.
- Wallet Integrations (TBD)
A standalone program that allows for the registration and maintenance of a finality provider. It monitors for a finality provider's inclusion in the active set, commits Extractable One Time Signature (EOTS) public randomness, and submits finality votes for blocks. Finality votes are created through a connection to a standalone EOTS manager daemon responsible for securely maintaining the finality provider's private keys.
A standalone program utilised by the covenant emulation committee members. It emulates covenant functionality by monitoring for pending staking requests, verifying their contents, and submitting necessary signatures.
The IBC Relayer maintains the IBC protocol connection between Babylon and other Consumer Zones (CZs). It is responsible for updating the CZ's light client inside the Babylon ledger to enable checkpointing and propagating checkpoint information to the Babylon smart contract deployed within the CZ.
There are different IBC relayer implementations that can achieve this function. Most notably:
- Cosmos Relayer: A fully functional relayer written in Go.
- Babylon Relayer: A wrapper of the Cosmos Relayer that can maintain a one-way IBC connection. It is recommended to be used when the Consumer Zone does not deploy the Babylon smart contract.
- Hermes Relayer: A fully functional relayer written in Rust.
A CosmWasm smart contract intended for deployment in a Consumer Zone. It enables Bitcoin Checkpointing functionality without introducing invasive changes in the codebase of the Consumer Zone. Based on the Bitcoin Checkpointing functionality, the Consumer Zone can make decisions based on the inclusion of its checkpoints in the Bitcoin ledger (e.g. execute BTC-assisted unbonding requests).