tBTC Stakers FAQ

Who are Threshold stakers?

Threshold Network runs on staker nodes, where there is one Staker for one node. Stakers can operate their own node or stake via Staking Providers (also known as delegating). Nodes are virtual or physical computers that run cryptography software (Keep Core Client) to coordinate the decentralized operations.

How are stakers incentivized?

Stakers stake T tokens and earn staking rewards to incentivize their participation in the network. Rewards are generated by minting new T tokens and expanding the total supply. Stakers that authorize to all Threshold applications can earn ~15% annual yield via the Stable Yield mechanism.

What is the minimum stake?

The minimum stake to run a node is 40,000T. Stakers must decide which applications they would like to authorize their stake to, then provide the corresponding service. A stake can be partially or fully allocated to any live application, but the total sum of tokens authorized cannot be below the minimum of 40,000.

How does authorizing applications and reward allocation work?

As of Nov 18, 2023 there are two Threshold applications to which a staker can authorize their stake: tBTC and TACo. tBTC has another application bundled with it, called Random Beacon, which must also be authorized via the staker dashboard.

Rewards are allocated as follows: 75% to tBTC/Random Beacon and 25% to TACo. To earn the full 15% annual yield on their stake, stakers must fully authorize to both applications.

For example, a stake of 40,000 T that allocates 100% to tBTC/Random Beacon and 60% to TACo would earn the following yield per month:

yieldmonthly=40000βˆ—((1βˆ—0.75βˆ—0.15)+(0.6βˆ—0.25βˆ—0.15)12)=450Tyield_{monthly}= 40000* ( \frac{(1 * 0.75 * 0.15) +(0.6*0.25*0.15)}{12} ) = 450 T

How are rewards distributed?

Rewards become available within the first few days of the month for the prior month and must be claimed manually through the staking dashboard at https://dashboard.threshold.network/staking.

What are the costs of staking?

Stakers who operate nodes incur infrastructure and operational costs. Infrastructure costs include running computers either physically or in the cloud. Operational costs include maintenance, upgrades, and troubleshooting. Staking Providers incur customer service costs in addition to the above.

Stakers who delegate simply pay service fees to Staking Providers. Each Staking Provider has a different business model, and typically charges a maintenance fee together with a commission from staking rewards.

How many staker nodes are there?

As of Nov 18 2023, there are 149 tBTC nodes in Threshold Network. The number of nodes may change at any time. For the latest figure, please visit https://status.threshold.network/.

Note that these nodes are on stand-by to join the Beta Stakers Program as the allow-list expands (see below), but the majority are not currently involved in minting, redemption or custody.

What are the requirements for running a node?

Staking and running a node requires technical competence and operational commitment. Stakers need to monitor their nodes closely to ensure correct node version, uptime, and prompt maintenance when needed.

What is the tBTC Beta Stakers Program?

As part of the near-term strategy to bootstrap tBTC utility, the Threshold Network allow-lists a limited set of authorized stakers to participate in tBTC minting and redemptions. This ensures system continuity and reliability, whilst allowing for the staker set to expand slowly over time. These allow-listed stakers are called Beta Stakers. The goal of the Beta Staker program is to ensure key operations run properly without interruptions during early growth.

Note that this is a form of 'progressive decentralization', but with a clear, simple and already deployed pathway for the decentralization depth to increase – i.e. by adding more independent stakers to the allow list. To that end, a proposal is in the works to delegate DAO T to additional independent nodes, enabling them to join the Beta Staker Program and increase the infrastructural and geographical diversity of the node array. Note that the longer-term goal is to end the permissioned paradigm and retire the Beta Stakers Program (see below).

As of Nov 18, 2023, there are 20 Beta Stakers delegating their stakes across three professional staking providers (Boar, Staked, P2P). The number of Beta Stakers may change at any time. Visit the contract page on Etherscan for the latest figure.

For system requirements and cost estimates to run a staker node, please see tBTC Beta Stakers Program

How long will the Beta Stakers Program be in place?

Ultimately, the network's objective is to retire Beta Stakers Program altogether and make staking fully permissionless. For that, the following infrastructure upgrades have to take place:

  • [Released] Implement decentralized wallet coordination (RFC-12)

  • [Released] Implement optimistic redemptions

  • [Released] Implement moving funds across wallets and heartbeats in the client

  • [In progress] Migrate signature scheme from tECDSA to Schnorr (RFC-10)

  • Enable fraud and slashing mechanisms in contracts

  • Migrate staking rewards calculation to on-chain contracts

  • Optimize network layer for scale

  • Integrate DKG with the random beacon (or alternative solution)

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