Keep allows developers to use Bitcoin safely in Ethereum DeFi

Decentralized finance (DeFi) is one of the most exciting sectors to watch in 2020. Over the past year the amount of ETH locked in DeFi applications has grown from roughly $300 million to over $1 billion. tBTC’s developers have developed a solution that best utilizes the respective strengths of BTC and ETH to deliver a new product. The key point for users is that tBTC makes it possible to safely and transparently use Bitcoin to act on Ethereum:

tBTC lets you earn with your BTC in 3 simple steps

tBTC, an ERC-20 token fully backed by BTC, can help alleviate uncertainty for first-time DeFi users. The token, currently live on the Ropsten testnet, allows people for the first time to safely use BTC on the Ethereum blockchain. More than that, by combining the strengths of both chains, it offers users a safe and simple way to participate in the growing DeFi space.

Throughout this section of our Knowledgebase, we’ll cover Keep basics of staking, distribution & key generation, and beacons.

Keep Basics – tBTC

Using BTC on the Ethereum Blockhain

Decentralized finance (DeFi) is one of the most exciting sectors to watch in 2020. Over the past year the amount of ETH locked in DeFi applications has grown from roughly $300 million to over $1 billion. tBTC’s developers have developed a solution that best utilizes the respective strengths of BTC and ETH to deliver a new product. The key point for users is that tBTC makes it possible to safely and transparently use Bitcoin to act on Ethereum:

tBTC lets you earn with your BTC in 3 simple steps

tBTC, an ERC-20 token fully backed by BTC, can help alleviate uncertainty for first-time DeFi users. The token, currently live on the Ropsten testnet, allows people for the first time to safely use BTC on the Ethereum blockchain. More than that, by combining the strengths of both chains, it offers users a safe and simple way to participate in the growing DeFi space.

This is accomplished in  three steps

1. Take BTC
2. Call upon a “signers’ group” (explained below) to hold the BTC safely and trustlessly
3. Once your BTC has provably landed with the signers, receive TBTC at a peg of 1:1

The process can be reversed just as easily using the exact same steps.

tBTC is transparent and open source

The token, built by the teams at Summa and Keep, is fully open source. It uses an elliptic curve signature algorithm called t-ECDSA — also in use today by Binance. (Zcash and Gnosis have also been working with similar concepts.) This is a more secure alternative to multisig, and it requires less space on chain, which means it’s also cheaper.

Signers’ groups reduce counterparty risk through decentralization

Another key way tBTC ensures safety and transparency is by addressing counterparty risk. It uses a system of “signers’ groups” that allows tBTC to process transactions safely and transparently without a trusted middleman. This decentralization further reduces counterparty risk, since there is no longer a possibility of the middleman collapsing.

In order to ensure decentralization, tBTC uses “signers,” who operate in groups of three. All three signers must approve a transaction for it to proceed. In order to incentivize people to fill this role, signers receive a micro fee of 20 basis points (bps) for every tBTC “minted” in exchange for a BTC. Of course, there also needs to be a mechanism for ensuring that the signers behave honestly.

tBTC uses an innovation called a random beacon: a decentralized random selection tool for selecting signers from a pool in a cryptographically secure and decentralized way. This beacon cannot be gamed or manipulated. Additionally, signers must post a “bond” equal to 150% of the amount of BTC being deposited by the user in order to fulfill their role; this acts as collateral to ensure good behavior. If any of the signers decided to “cheat” and steal the user’s BTC, the bond would be forfeit and the signer would lose more than they had gained through stealing. Moreover, the bonded ETH is swapped for TBTC and can then in turn be redeemed for BTC by the user whose funds were stolen, making them whole.

Fully backed by BTC

Unlike the many synthetic tokens in the market, TBTC is fully backed by Bitcoin at a rate of 1:1. This means that for every TBTC in circulation, there is always at least one BTC in value locked in the system. This should give token holders confidence that they are not at risk of falling victim to a run on the asset. Further, since value is fungible across BTC, TBTC, and ETH, any BTC that might be lost to theft is more than compensated for by the guilty signer’s forfeited ETH.

Use Bitcoin to leverage the power of Ethereum

It’s true that Bitcoin has clear dominance in terms of overall crypto market capitalization, with a combined value greater than that of all other tokens put together. But it’s Ethereum that has managed to attract the largest developer community. Until now this has meant that the largest pool of crypto capital has been effectively cut off from many projects that push the boundaries of what is possible with blockchain and promise to rewrite the way the world looks at finance and other crucial areas.

Now, tBTC combines the stability and liquidity of Bitcoin with the innovations and developer momentum of Ethereum. When the token launches on Ethereum mainnet it will offer people a transparent, decentralized, and safe way to put BTC to work. Users of tBTC will be able to use their Bitcoin to take part in the innovative projects and opportunities being developed by Ethereum’s passionate community.

Resources:

itBTC Mailing list   for updates including information about tBTC’s upcoming launch on Ethereum mainnet. To learn more about tBTC’s technical design, read the technical spec. Join the Keep #tbtc channel on Discord for technical questions about tBTC and tbtc.js, and follow these Twitter handles for news and opportunities to participate:

@Keep_project

@mhluongo

Staking Delegation and Claiming Rewards with MetaMask

IMPORTANT!

Screenshots and steps are from Testnet and shown using grant tokens to delegate. Steps and screens may change once KEEP goes to Mainnet.

Update:

The KEEP Documentation has updated to show the additional wallet types supported when Mainnet launches.  To see wallets support for Mainnet, go here: https://keep-network.gitbook.io/staking-documentation/how-to-stake/how-to-get-staking-after-tge

This guide is in 2 parts:

1. Delegating to a KEEP operator
2. Claiming your rewards

This guide will go through the steps for delegation and claiming rewards with MetaMask (it is only one available for Testnet).

(Optional) Setting up MetaMask

To access the KEEP dashboard and delegate to an operator, you will need to import your wallet to MetaMask (or connect your hardware wallet to MetaMask).

Follow these instructions to import an account using the JSON file: https://metamask.zendesk.com/hc/en-us/articles/360015489331-Importing-an-Account

Follow these instructions to connect your Ledger or Trezor wallet: https://metamask.zendesk.com/hc/en-us/articles/360020394612-How-to-connect-a-Trezor-or-Ledger-Hardware-Wallet

Part 1: The Keep Dashboard and Delegating to an Operator

Selecting your Account

Go to https://dashboard.test.keep.network/ in the same browser in which MetaMask is set up.

In MetaMask, select the account with the Keep tokens.

IMPORTANT! You control which wallet the KEEP dashboard is connected to through MetaMask. Before any action in the Dashboard, check the top right corner of the dashboard to make sure you are using the correct account.

Delegating

Go to the TOKENS tab on the dashboard (https://dashboard.test.keep.network/tokens)

This will show you:

• On the right is a summary of your tokens
• On the left is the place to delegate
• Below is the history of your delegations

The following screenshots are from Testnet and show delegating Grant tokens. In Mainnet, the actual Owned token balance will show for your wallet, and will delegate Owned tokens, not Grant tokens.

 1. Enter the amount of tokens to delegate to the KEEP.

     2. Then enter the necessary addresses.

Definitions of the addresses from KEEP’s official documentation with notes specific to Blockdaemon. https://keep-network.gitbook.io/staking-documentation/how-to-stake/how-to-get-staking-after-tge

• • Beneficiary Address: The address to which rewards are sent that are generated by stake doing work on the network.
    • Recommended this to be a separate cold wallet address, as you will receive rewards in ETH.
  • Operator Address: A staking client that has been delegated a stake, but may not yet be in a singing or random beacon group. Also known as a staker, this could be a client you’re running in-house or it could be a staking provider.
    •   Blockdaemon’s Operator Address: <tbd mainnet>
  • Authorizer: A role that approves operator contracts and slashing rules for operator misbehavior.
    • It is recommended by KEEP to have this be the same as the Operator address, as the KEEP Operator will focus on choosing the contracts as they are released or updates are done.
    • Blockdaemon’s Authorizer (Operator) Address: <tbd mainnet> 

IMPORTANT! The addresses in the image below are for Testnet, not Mainnet.  Please refer to the addresses highlight above to stake to Blockdaemon.

          3. Select delegate, and you’re done!

Part 2: Claiming Rewards

The REWARDS tab on the KEEP dashboard will show the rewards earned and available to claim, after delegating to an operator. As well as reward history.

https://dashboard.test.keep.network/rewards

It will be required to visit this tab to collect your ETH rewards.

For more information on claiming rewards, go to KEEP’s documentation: https://keep-network.gitbook.io/staking-documentation/how-to-stake/how-to-claim-rewards.

Resources

Keep Exchange

 Beginners guide to Keep Staking

Keep: the Random Beacon

The Keep Network requires a trusted source of randomness for the process of trustless group election. While the network requires that randomness to function correctly, the source of randomness is itself broadly applicable. This trusted source of randomness takes the form of a BLS Threshold Relay.

The threshold relay is a way of generating verifiable randomness that is resistant to bad actors both in the relay network and on the anchoring blockchain. The basic functioning of the relay (further details are in the section on System Details) is:

• Some number of groups exist in the relay.
• An arbitrary seed value v_s counts as the first entry in the relay.^[1]
• A request r_i is dispatched to the chain for a new entry.
• The previous entry v_s is used to choose a group to produce the response to the request.
• v_s is signed by at least a subset of the chosen group members, and the resulting signature is the entry generated in response to the request. It is published to the anchoring blockchain as the entry v_i.
• The new entry v_i may trigger the formation of a new group from the set of all members in the relay.
• A group expires after a certain amount of time.

Resources

• Full info and implementation of the Random Beacon
• Random Beacon group selection
• Distributed Key Generation
• Random Beacon signing
• Signature Generaton