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BTC Staker

1. Overview

BTC-Staker is a toolset designed for seamless Bitcoin staking. It consists of two components:

  1. stakerd - The stakerd daemon manages connections to the Babylon and Bitcoin nodes.

  2. stakercli - The stakercli is a command line interface (CLI) to facilitate interaction with the stakerd daemon . It enables users to stake funds, withdraw funds, unbond staked funds, retrieve the active finality providers set in Babylon, and more. It serves as an intuitive interface for effortless control and monitoring of your Bitcoin staking activities.

2. Setting up a Bitcoin node

The stakerd daemon requires a running Bitcoin node and a legacy wallet loaded with signet Bitcoins to perform staking operations.

You can configure stakerd daemon to connect to either bitcoind or btcd node types. While both are compatible, we recommend using bitcoind. Ensure that you are using legacy wallets, as stakerd daemon doesn't currently support descriptor wallets.

Below, we'll guide you through setting up a signet bitcoind node and a legacy wallet:

2.1. Download and Extract Bitcoin Binary:

# Download Bitcoin Core binary
wget https://bitcoincore.org/bin/bitcoin-core-26.0/bitcoin-26.0-x86_64-linux-gnu.tar.gz

# Extract the downloaded archive
tar -xvf bitcoin-26.0-x86_64-linux-gnu.tar.gz

# Provide execution permissions to binaries
chmod +x bitcoin-26.0/bin/bitcoind
chmod +x bitcoin-26.0/bin/bitcoin-cli

2.2. Create and start a Systemd Service:

Please update the following configurations in the provided file:

  1. Replace <your_rpc_username> and <your_rpc_password> with your own values. These credentials will also be utilized in the btc-staker configuration file later on.
  2. Ensure that the <user> is set to the machine user. In the guide below, it's set to ubuntu.
  3. Note that deprecatedrpc=create_bdb is necessary to enable the creation of a legacy wallet, which has been deprecated in the latest core version. For more information, refer to the Bitcoin Core 26.0 release page here and this link.
  4. If you want to enable remote connections to the node, you can add rpcallowip=0.0.0.0/0 and rpcbind=0.0.0.0 to the bitcoind command.
  5. Start the bitcoind with -txindex option to make sure btc-staker can get all needed bitcoin transaction data.
# Create the service file
sudo tee /etc/systemd/system/bitcoind.service >/dev/null <<EOF
[Unit]
Description=bitcoin signet node
After=network.target

[Service]
User=<user>
Type=simple
ExecStart=/home/ubuntu/bitcoin-26.0/bin/bitcoind \
    -deprecatedrpc=create_bdb \
    -signet \
    -server \
    -txindex \
    -rpcport=38332 \
    -rpcuser=<your_rpc_username> \
    -rpcpassword=<your_rpc_password>
Restart=on-failure
LimitNOFILE=65535

[Install]
WantedBy=multi-user.target
EOF
# Start the service
sudo systemctl daemon-reload
sudo systemctl enable bitcoind
sudo systemctl start bitcoind
# Check the status and logs of the service
systemctl status bitcoind
journalctl -u bitcoind -f

2.3. Create legacy wallet and generate address:

2.3.1. Create a legacy wallet:

~/bitcoin-26.0/bin/bitcoin-cli -signet \
    -rpcuser=<your_rpc_username> \
    -rpcpassword=<your_rpc_password> \
    -rpcport=38332 \
    -named createwallet \
    wallet_name=btcstaker \
    passphrase="<passphrase>" \
    load_on_startup=true \
    descriptors=false
  • Ensure you use the same rpc rpcuser, rpcpassword, rpcport that you used while setting up the bitcoind systemd service.
  • -named createwallet indicates that a new wallet should be created with the provided name.
  • wallet_name=btcstaker specifies the name of the new wallet and <passphrase> corresponds to the wallet pass phrase. Ensure you use the wallet name and passphrase configured here in the walletconfig section of the stakerd.conf file.
  • Setting load_on_startup=true ensures that the wallet automatically loads during system startup.
  • descriptors=false disables descriptors, which are not currently supported by the btc-staker.

2.3.2. Load the wallet:

You can load the wallet with the loadwallet command:

~/bitcoin-26.0/bin/bitcoin-cli -signet \
    -rpcuser=<your_rpc_username> \
    -rpcpassword=<your_rpc_password> \
    -rpcport=38332 \
    loadwallet "btcstaker"

where rpcuser, rpcpassword, and rpcport correspond to the RPC configuration you have set up and "btcstaker" should be replaced with the wallet name that you created.

2.3.3 Generate a new address for the wallet

You can generate a btc address through the getnewaddress command:

~/bitcoin-26.0/bin/bitcoin-cli -signet \
    -rpcuser=<your_rpc_username> \
    -rpcpassword=<your_rpc_password> \
    -rpcport=38332 \
    getnewaddress

where rpcuser, rpcpassword, and rpcport correspond to the RPC configuration you have set up.

2.4. Request signet BTC from faucet:

Use the faucet link to request signet BTC to the address generated in the previous step. You can use the following commands if you have received the funds

You can immediately see the amount using getunconfirmedbalance

~/bitcoin-26.0/bin/bitcoin-cli -signet \
    -rpcuser=<your_rpc_username> \
    -rpcpassword=<your_rpc_password> \
    -rpcport=38332 \
    getunconfirmedbalance

You can also see info about the transaction that the faucet gave you using gettransaction

~/bitcoin-26.0/bin/bitcoin-cli -signet \
    -rpcuser=<your_rpc_username> \
    -rpcpassword=<your_rpc_password> \
    -rpcport=38332 \
    gettransaction $TXID

where $TXID is the transaction id that you received from the faucet.

Once the tx is confirmed you can check the funds using getbalance command

~/bitcoin-26.0/bin/bitcoin-cli -signet \
    -rpcuser=<your_rpc_username> \
    -rpcpassword=<your_rpc_password> \
    -rpcport=38332 \
    getbalance

Notes:

  1. Ensure to run the Bitcoin node on the same network as the one the Babylon node connects to. For the Babylon testnet, we are using the BTC Signet.
  2. Expected sync times for the BTC node are as follows: Signet takes less than 20 minutes, testnet takes a few hours, and mainnet could take a few days.
  3. You can check the sync progress in bitcoind systemd logs using journalctl -u bitcoind -f. It should show you the progress percentage for example it is progress=0.936446 in this log 
    Jan 29 18:55:50 ip-172-31-85-49 bitcoind[71096]:
2024-01-29T18:55:50Z UpdateTip: new best=00000123354567a29574e6bdd263409b8eab6c05c6ef2abad959b092bf61fe9a
height=169100 version=0x20000000 log2_work=40.925924 tx=2319364
date='2023-11-12T19:42:53Z' progress=0.936446
cache=255.6MiB(1455996txo)
    Alternatively, you can also check the latest block in a btc explorer like https://mempool.space/signet and compare it with the latest block in your node.
  4. Ensure that you use a legacy (non-descriptor) wallet, as BTC Staker doesn't currently support descriptor wallets. You can check the wallet format using 
     ~/bitcoin-26.0/bin/bitcoin-cli -signet \
  -rpcuser=<your_rpc_username> \
  -rpcpassword=<your_rpc_password> \
  -rpcport=38332 \
  getwalletinfo
    The output should be similar to this and the format should be bdb: 
    {
  "walletname": "btcstaker",
  "walletversion": 169900,
  "format": "bdb",
  "balance": 0.00000000,
  "unconfirmed_balance": 0.00000000,
  "immature_balance": 0.00000000,
  "txcount": 0,
  "keypoololdest": 1706554908,
  "keypoolsize": 1000,
  "hdseedid": "9660319ab465abc05db95ad17cb59a9ec8f106fd",
  "keypoolsize_hd_internal": 1000,
  "unlocked_until": 0,
  "paytxfee": 0.00000000,
  "private_keys_enabled": true,
  "avoid_reuse": false,
  "scanning": false,
  "descriptors": false,
  "external_signer": false
}
  5. You can also use bitcoin.conf instead of using flags in the bitcoind cmd. Please check the Bitcoin signet wiki and this manual here to learn how to set bitcoin.conf. Ensure you have configured the bitcoind.conf correctly and set all the required parameters as shown in the systemd service file above.

3. BTC Staker Installation

Prerequisites

This project requires Go version 1.21 or later.

Install Go by following the instructions on the official Go installation guide.

Install essential tools and packages needed to compile and build the binaries.

sudo apt install build-essential

Downloading the code

To get started, clone the repository to your local machine from Github:

git clone https://github.com/babylonlabs-io/btc-staker.git

You can choose a specific version from the official releases page

cd btc-staker # cd into the project directory
git checkout <release-tag>

Building and installing the binary

At the top-level directory of the project

make install

The above command will build and install the following binaries to $GOPATH/bin:

  • stakerd: The daemon program for the btc-staker
  • stakercli: The CLI tool for interacting with the stakerd.

If your shell cannot find the installed binaries, make sure $GOPATH/bin is in the $PATH of your shell. Usually these commands will do the job

export PATH=$HOME/go/bin:$PATH
echo 'export PATH=$HOME/go/bin:$PATH' >> ~/.profile

Create a Babylon keyring (keyring backend: test) with funds

The stakerd daemon requires a keyring with loaded Babylon tokens to pay for the transactions. Follow this guide to create a keyring and request funds.

4. BTC Staker Setup

Staker daemon (stakerd) configuration

stakercli tool serves as a control plane for the Staker Daemon.

Initialize the home directory for the Staker Daemon and dump the default configuration file to the specified directory.

stakercli admin dump-config --config-file-dir /path/to/stakerd-home/

After initialization, the home directory will have the following structure

ls /path/to/stakerd-home/
    ├── stakerd.conf

If the --config-file-dir flag is not specified, then the default home directory will be used. For different operating systems, those are:

  • MacOS ~/Library/Application Support/Stakerd
  • Linux ~/.Stakerd
  • Windows C:\Users\<username>\AppData\Local\Stakerd

In the following, we go through important parameters of the stakerd.conf file.

Babylon configuration

Notes:

  1. The Key parameter in the config below is the name of the key in the keyring to use for signing transactions. Use the key name you created in Create a Babylon keyring with funds

  2. Ensure that the KeyDirectory is set to the location where the keyring is stored.

  3. Ensure to use the test keyring backend

  4. Ensure you use the correct ChainID for the network you're connecting to. For example, for Babylon devnet, the chain ID is bbn-dev-5.

  5. To change the Babylon RPC/GRPC address, update the following:

    RPCAddr = https://rpc.devnet.babylonchain.io:443 # rpc node address
GRPCAddr = https://grpc.devnet.babylonchain.io:443 # grpc node address

    The above addresses are for Babylon devnet.

  6. If you encounter any gas-related errors while performing staking operations, consider adjusting the GasAdjustment and GasPrices parameters. For example, you can set:

    GasAdjustment = 1.5
GasPrices = 0.002ubbn
[babylon]
# Name of the key in the keyring to use for signing transactions
Key = btc-staker

# Chain id of the chain (Babylon)
ChainID = bbn-test

# Address of the chain's RPC server (Babylon)
RPCAddr = http://localhost:26657

# Address of the chain's GRPC server (Babylon)
GRPCAddr = https://localhost:9090

# Directory to store staker keys in
KeyDirectory = /path/to/stakerd-home/

BTC Node configuration

Notes:

  1. BTC configuration should reflect the BTC node that we're running and the network Babylon connects to.
  2. You can use this faucet to receive signet BTC.
[chain]
# btc network to run on
Network = signet

[btcnodebackend]
# type of node to connect to {bitcoind, btcd}
Nodetype = bitcoind

# type of wallet to connect to {bitcoind, btcwallet}
WalletType = bitcoind

# fee mode to use for fee estimation {static, dynamic}. In dynamic mode fee will be estimated using backend node
FeeMode = static

BTC Wallet configuration

Note: Make sure you create a BTC wallet, name it appropriately, and load it with enough signet BTC.

[walletconfig]
# name of the wallet to sign Bitcoin transactions.
# this should be the same as set in createwallet command in bitcoind.
WalletName = btcstaker

# passphrase to unlock the wallet
WalletPass = walletpass

[walletrpcconfig]
# location of the wallet rpc server
# note: in case of bitcoind, the wallet host is same as the rpc host
Host = localhost:38332

# user auth for the wallet rpc server
# note: in case of bitcoind, the wallet rpc credentials are same as rpc credentials
# this should be the same as set in the bitcoind daemon
User = your_rpc_username

# password auth for the wallet rpc server. This should be the same as set in the bitcoind daemon
Pass = your_rpc_password

# disables tls for the wallet rpc client
DisableTls = true

BTC Node type specific configuration

Make sure to replace the following important parameters related to bitcoind as per your setup.

[bitcoind]
# The daemon's rpc listening address
# note: P2P port for signet is 38332/38333
# mainnet 8332/8333
# testnet 18332/18333
# regtest 18443
# ref - https://github.com/bitcoin/bitcoin/blob/03752444cd54df05a731557968d5a9f33a55c55c/src/chainparamsbase.cpp#L39
RPCHost = 127.0.0.1:38332

# Username for RPC connections. This should be the same as set in the bitcoind daemon
RPCUser = your_rpc_username

# Password for RPC connections. This should be the same as set in the bitcoind daemon
RPCPass = your_rpc_password

# The address listening for ZMQ connections to deliver raw block notifications
ZMQPubRawBlock = tcp://127.0.0.1:29001

# The address listening for ZMQ connections to deliver raw transaction notifications
ZMQPubRawTx = tcp://127.0.0.1:29002

To see the complete list of configuration options, check the stakerd.conf file.

4. Starting staker daemon

You can start the staker daemon using the following command:

stakerd

This will start the Staker daemon RPC server at the address specified in the configuration under the RawRPCListeners field. A custom address can also be specified using the --rpclisten flag.

stakerd --rpclisten 'localhost:15812'

time="2023-12-08T11:48:04+05:30" level=info msg="Starting StakerApp"

All the available CLI options can be viewed using the --help flag. These options can also be set in the configuration file.

5. Staking operations with stakercli

The following guide will show how to stake, withdraw, and unbond Bitcoin.

Stake Bitcoin

1. List active BTC finality providers on Babylon

Find the BTC public key of the finality provider you intend to stake to.

When staking, specify the BTC public key of a single finality provider using the --finality-providers-pks flag in the stake command.

Note Make sure to use only one finality provider BTC public key in the --finality-providers-pks flag of the stake command, as multiple providers are not currently supported.

stakercli daemon babylon-finality-providers
{
    "finality_providers": [
        {
            "babylon_public_Key": "0294092d0266c8d26544291b692e13f1e4fcba7829c5445ff99fcb3aefb23fe7cd",
            "bitcoin_public_Key": "3328782c63404386d9cd905dba5a35975cba629e48192cea4a348937e865d312"
        }
    ],
    "total_finality_providers_count": "1"
}

2. Obtain the BTC address from the BTC wallet

Find the BTC address that has sufficient Bitcoin balance that you want to stake from.

Note: In case you don't have addresses with adequate balances, you can use the faucet to receive signet BTC. Visit the faucet link to acquire signet BTC.

stakercli daemon list-outputs
{
  "outputs": [
    {
      "amount": "10 BTC",
      "address": "bcrt1q56ehztys752uzg7fzpear08l5mw8w2kxgz7644"
    },
    {
      "amount": "10 BTC",
      "address": "bcrt1ql94x9v78ag7qx896f0axka809u55pla8cywsvn"
    }
  ]
}

3. Stake Bitcoin

Stake Bitcoin to the finality provider of your choice. The --staking-time flag specifies the timelock of the staking transaction in BTC blocks. The --staking-amount flag specifies the amount in satoshis to stake.

stakercli daemon stake \
  --staker-address bcrt1q56ehztys752uzg7fzpear08l5mw8w2kxgz7644 \
  --staking-amount 1000000 \
  --finality-providers-pks 3328782c63404386d9cd905dba5a35975cba629e48192cea4a348937e865d312 \
  --staking-time 10000 # ~70 days

# Transaction details
{
  "tx_hash": "6bf442a2e864172cba73f642ced10c178f6b19097abde41608035fb26a601b10"
}

Note: You can self delegate i.e. stake to your own finality provider. Follow the finality provider registration guide to create and register a finality provider to Babylon. Once the finality provider is registered, you can use your finality provider BTC public key in the --finality-providers-pks flag of the stake command.

Unbond staked funds

The unbond cmd initiates the unbonding flow which involves communication with the Babylon chain, Covenant emulators, and the BTC chain. It

  1. Build the unbonding transaction and send it to the Babylon chain
  2. Wait for the signatures from the covenant emulators
  3. Send the unbonding transaction to the BTC chain

--staking-transaction-hash is the transaction hash from the response of the stake command.

stakercli daemon unbond \
  --staking-transaction-hash 6bf442a2e864172cba73f642ced10c178f6b19097abde41608035fb26a601b10

Note:

  1. You can also use this cmd to get the list of all staking transactions in db. 
    stakercli daemon list-staking-transactions
  2. There is a minimum unbonding time currently set to 50 BTC blocks. After this period, the unbonding timelock will expire, and the staked funds will be unbonded.

Withdraw staked funds

The staker can withdraw the staked funds after the timelock of the staking or unbonding transaction expires.

--staking-transaction-hash is the transaction hash from the response of stake command.

stakercli daemon unstake \
  --staking-transaction-hash 6bf442a2e864172cba73f642ced10c178f6b19097abde41608035fb26a601b10

Note: You can also use this cmd to get the list of all withdrawable staking transactions in db.

stakercli daemon withdrawable-transactions

In order to unstake you'll need to wait for your staking/unbonding tx to be deep enough in btc so that the timelock expires.

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