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The Nakamoto upgrade that went live in October 2024 introduced a new role of "signer" to the Stacks ecosystem. Signers participate in the Stacks protocol by validating and signing the blocks produced by Stacks miners; they will also play a critical role in maintaining sBTC, a trust-minimized, fully programmable, 1-1 Bitcoin-backed asset.
The role of signers, as well as initial criteria for becoming an sBTC signer, is detailed in SIP-028. This SIP explains how the role of signers changes over the various phases of sBTC’s roll out. As the Stacks ecosystem gears up for sBTC’s launch, we thought it would be helpful to break down this SIP in more accessible terms, so you know exactly what’s coming and when.
A Refresher on sBTC and Signers
For over a year, Stacks core devs worked on the Nakamoto upgrade, which brought fast blocks to Stacks and went live on October 28th. This release also laid the groundwork for sBTC and introduced the new role of signers. Here’s a brief overview of those two terms.
sBTC
sBTC is a programmable Bitcoin asset enabling the next generation of DeFi on Bitcoin. With its trust-minimized design, users can deploy their BTC in DeFi applications, taking advantage of Stacks’ fast block time and 100% Bitcoin finality.
Under the hood, sBTC is a smart contract that follows the SIP-010 fungible token standard on Stacks. sBTC is backed 1 to 1 with BTC. Users can convert BTC to sBTC within 3 Bitcoin blocks and redeem sBTC for BTC within 6 Bitcoin blocks.
Signers
Stacks signers are network participants that are responsible for validating and signing the blocks produced by Stacks miners. Eventually, signers will also be responsible for processing the peg-in and peg-outs of the sBTC bridge. As a reward for that work, signers receive BTC as part of Stacks consensus.
Signers are an open, permissionless membership set, and anyone can become a signer provided they meet the minimum stacking threshold required (and if they don’t meet the minimum, they can join a signer pool).
However, in order to maintain the stability and security of the sBTC bridge, sBTC and signer responsibilities will roll out in phases. In the initial phase of sBTC, sBTC signers will be an elected subset of the broader Stacks signer set. In future phases, those roles will be one and the same. Let’s break that down.
The Phases of sBTC Signers: Criteria & Responsibilities
The role of signers in the Stacks network will evolve over time. Today, signers simply validate new Stacks blocks, and in each phase of sBTC’s rollout, the requirements and responsibilities of signers will change.
The dev team working on sBTC decided on a phased rollout to maximize security and stability at launch. This measured approach with gradually increasing complexity and decentralization is an industry best practice that allows sBTC devs to ensure the robustness of the design with real-world usage.
These phases are covered in greater detail in Bitcoin L2 Labs’s most recent blog post.
Phase 1: Bitcoin Deposits
In the initial phase of sBTC’s launch, users can deposit BTC into the sBTC bridge, but they cannot withdraw any BTC. Withdraws will be enabled in phase 2.
In this phase, the sBTC bridge will be maintained by 15 elected signers, including Figment, Blockdaemon, Kiln, Chorus One, Asymmetric Research, and more. These signers are responsible for processing deposits, and each holds one key to the multisig UTXO address holding BTC deposits. These signers have been reviewed and voted on by the Stacks community based on criteria detailed in SIP-028. At a high level, the signer criteria for this phase included:
- Experience running blockchain services like staking and validating
- Active participation in Stacks 2.4 testnet and mainnet cycles
- Commitment to maintaining >99% uptime for their signer node as well as dedicated communication channels with Stacks core engineers
- General contributions to the Bitcoin or Stacks ecosystems
- Geographic diversity across signers
sBTC signer responsibilities in this phase are different and distinct from Stacks signers.
Remember that while there are 15 elected signers for sBTC in this bootstrapping phase, there are 42 signers actively participating in the Stacks ecosystem. sBTC signer responsibilities in this phase are different and distinct from Stacks signers.
Stacks signers earn rewards for stacking their STX tokens and actively participating in the Stacks protocol by signing mined blocks. In contrast, sBTC signers perform sBTC-specific operations, such as approving deposits and minting sBTC.
In order for the sBTC bridge to function, 70%—or 11 out of 15—of the sBTC signers must be online and participating honestly. Framed another way, as long as 30% of signers—or 5 out of 15—behave honestly, all funds deposited in the bridge are safe.
If necessary, it is possible for the protocol to update the signer set. In this case, 70% of the sBTC signers would need to vote and approve any changes in the signer set. This process will also be performed if a signer needs to rotate their cryptographic keys.
Phase 2: Withdrawals Enabled
In phase 2 of the sBTC rollout, withdrawals are enabled. This phase will be activated 6-8 weeks following phase 1 and is targeted for February 1-15, 2025.
The sBTC signer set is the same as phase 1: 15 whitelisted signers. In addition to performing the deposit (peg-in) operations the signers were responsible for in phase 1, they will also perform withdrawal (peg-out) operations. In this phase, the sBTC bridge will be fully bi-directional, meaning users can convert BTC to sBTC and vice versa.
sBTC deposits require 3 Bitcoin blocks (~30 minutes) and sBTC withdrawals require 6 Bitcoin blocks (~1 hour).
Phase 3: Signer Rotation
In the third phase of sBTC’s rollout, the biggest change is that sBTC signers will become an open, permissionless and rotating membership set, integrated with the Stacks Proof of Transfer (PoX) consensus protocol. sBTC will no longer be managed by a set of 15 whitelisted signers. Now any Stacks signer can become an sBTC signer and join the initial sBTC signer set. This phase will launch sometime after phase 2.
In this phase, sBTC signers can now be penalized for bad behavior. Instead of a slashing mechanism, if a signer doesn't perform its job or acts maliciously, it simply sacrifices its BTC rewards from Stacks consensus.
As a result of this open network with BTC rewards, we expect the number of sBTC signers to increase in this phase.
The same thresholds apply—70% of this open signer network, however many signers there may be, must be online and behave honestly to process sBTC operations. To enable this rotating set of signers, the deposited BTC will move with each rotation to a new multisig governed by the new signer set. You can learn more about how that works in detail here.
This phase enables a decentralized signer network, dramatically improving the trust assumptions and reducing the risk of collusion and liveness failures.
A Growth Catalyst for Stacks
Today, there is roughly 289K BTC bridged to Bitcoin layers and other blockchain ecosystems. That amounts to $27.4B. Only 483 BTC, or $45.8M, of that total is on Stacks today.
For most Bitcoin layers, the majority of their capital is BTC bridged to the network. The same should be true for Stacks, but it’s not— Stacks has a $3.9B market cap in STX, but only $45M in bridged BTC.
sBTC sets the stage for an unprecedented influx of BTC liquidity, which will drive increased ecosystem engagement, better pricing, and more opportunities for developers and users. Stacks promises to unlock Bitcoin’s full potential. sBTC is a major part of fulfilling that promise.
We’re incredibly excited for sBTC’s launch in December, and you should be too. If you’d like to learn more about sBTC, check out this resource from Bitcoin L2 Labs:
