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BitVM Protocol Node Incentives and Cost Specification

Global Parameters

  • FEE_RATE_L1: Bitcoin fee rate (unit: sats / vbyte)
  • Layer-1 (L1, Bitcoin) asset unit: BTC / sats
  • Layer-2 (L2, GOAT Network) asset unit: stakeToken (pegBTC)

Challenger

Initiating a Challenge

  • A challenge transaction is broadcast on Layer-1.

  • Layer-1 transaction fee cost: CHALLENGE_TX_VBYTES * FEE_RATE_L1.

  • A bond must be paid on Layer-1: CHALLENGE_BOND.

    • The bond is paid directly to the challenged operator.

Disprove

  • After a challenge is initiated, a disprove transaction must be broadcast.

  • The initiator of the disprove does not need to be the same entity as the challenge initiator.

  • Layer-1 transaction fee cost range:

    • DISPROVE_TX_VBYTES_MIN * FEE_RATE_L1
    • DISPROVE_TX_VBYTES_MAX * FEE_RATE_L1

Rewards Upon Success (Layer-2)

  • If the challenge succeeds:

    • The challenge initiator receives CHALLENGE_REWARD_L2.
    • The disprove initiator receives DISPROVE_REWARD_L2.

Watchtower

  • Responsible for monitoring operator behavior during the challenge window.
  • Must broadcast a WATCHTOWER_PROOF_TX.
  • Layer-1 transaction fee cost: WATCHTOWER_TX_VBYTES * FEE_RATE_L1.

Committee / Relayer

Committee

  • Under normal circumstances, no transactions need to be sent.

Relayer

  • Committee members may be configured as relayers.
  • Relayers submit graph-related transactions to Layer-2.
  • Relayers receive incentives based on the number of submissions.
  • Reward per submission: RELAYER_REWARD_L2.

Pegin / Pegout Fees

Pegin

  • When initiating a pegin, the user must pay a pegBTC fee.
  • Fee rate: PEGIN_FEE_RATE.
  • The fee is deducted from the pegin pegBTC amount.

Pegout

  • When executing a pegout, the operator must pay a pegBTC fee.
  • Fee rate: PEGOUT_FEE_RATE.
  • After a successful pegout, the operator receives a pegBTC reward.
  • Reward rate: PEGOUT_REWARD_RATE.

Operator

Layer-2 Staking

  • Operators must stake on Layer-2.

  • Minimum required stake: OPERATOR_STAKE_MIN.

  • Protocol constraints:

    • A single operator may execute at most two pegouts (graphs) concurrently.

    • Once any graph is successfully disproved:

      • The operator is prohibited from initiating new pegouts.

  • Therefore, the protocol requires:

    • OPERATOR_STAKE_MIN >= 2 × OPERATOR_SLASH_AMOUNT,
    • OPERATOR_SLASH_AMOUNT >= CHALLENGE_BOND + DISPROVE_TX_VBYTES_MAX * FEE_RATE_L1
    • to ensure that even in the worst case (two graphs being disproved simultaneously), sufficient stake remains to be slashed.

Malicious Behavior Penalties

  • If an operator behaves maliciously and is successfully challenged and disproved:

    • A fixed amount of stakeToken, OPERATOR_SLASH_AMOUNT, is deducted from the operator’s current stake.
    • The slashed stakeToken is distributed to the challenge initiator and the disprove initiator.
    • Any remaining portion is retained in the contract.

Layer-1 Fee Prefunding (Per Graph)

  • For each graph, the operator must pre-fund Layer-1 transaction fees:

    • GRAPH_BOND_L1.

  • Fees are later refunded depending on the execution path.

Action Additional Layer-1 Fee
take1 TAKE1_TX_VBYTES * FEE_RATE_L1
skip SKIP_TX_VBYTES * FEE_RATE_L1

Graph and Multi-Operator Mechanism

  • Each pegin may have multiple operators generating graphs in parallel.
  • Ultimately, only one operator can successfully execute take1.
  • All other operators must execute skip.

Testnet Parameter Configuration (Current)

Economic and Fee Parameters

FEE_RATE_L1 = 1 sats/vbyte

CHALLENGE_BOND = 0.01 BTC

CHALLENGE_REWARD_L2 = 0.0125 pegBTC
DISPROVE_REWARD_L2 = 0.0025 pegBTC

RELAYER_REWARD_L2 = not set

OPERATOR_STAKE_MIN = 0.06 pegBTC
OPERATOR_SLASH_AMOUNT = 0.03 pegBTC

GRAPH_BOND_L1 = 10_000 sats

PEGIN_FEE_RATE = 0.5%
PEGOUT_FEE_RATE = not set
PEGOUT_REWARD_RATE = 0.3%

Transaction Size Parameters (Testnet)

CHALLENGE_TX_VBYTES = 1_000

DISPROVE_TX_VBYTES_MIN = 500
DISPROVE_TX_VBYTES_MAX = 1_000_000

WATCHTOWER_TX_VBYTES = 4_000

TAKE1_TX_VBYTES = 2_000
SKIP_TX_VBYTES = 300