Dual-Token Staking Consensus

BounceBit introduces a Proof-of-Stake (PoS) consensus mechanism that rethinks conventional single-token staking models. This approach, we call it Dual-Token PoS, is a strategic innovation designed to enhance network security and engagement of network participants.

Dual-Token PoS Structure

BounceBit’s PoS architecture incorporates a set number of node operators that can be selected as Validators. Validators on BounceBit stake BB and or BBTC to record and verify transactions on the network and in return receive transaction fees as staking rewards. It is a hybrid model where each validator can accept both BBTC and or BB coins. There is no minimum number of tokens to be held. This dual-token system not only broadens the stakeholder base but also weaves an additional layer of resilience and security into the network’s consensus fabric. By using BTC in the consensus mechanism, we bootstrap the network with Bitcoins deep liquidity, easy accessibility, and relatively low volatility. Through this dual-token system we additionally reduce the risks that a new Layer 1 might face, e.g. an early death spiral effect caused by a sudden down surge of the BB token is inhibited by the economic value of Bitcoin.

Validator Dynamics and Onchain Contracts

Epoch-Driven Validator Selection and Incentivization

BounceBit’s blockchain operates on an Epoch-based timeline, with each Epoch encapsulating a 24-hour cycle. This systematic approach facilitates the structured selection of validators and the execution of consensus-related operations. Reward distribution, executed at the closure of each Epoch and denominated in BounceBit Tokens, is meticulously calibrated to benefit both validators and stakers, nurturing a cycle of perpetual engagement and network reinforcement.

Each Epoch, a new set of active validators is selected. The maximum number of validators in this set is decided by governance. Which validators can join the set is determined by their voting weight. The voting weight takes into account the amount of BB and BBTC staked by the node operator, and will be based on the price ratio between BB and BBTC. If the node operator is not selected, he will be assigned to the candidates set and reevaluated for the next epoch.

Sustainable Validator Economics:

To try to balance operational requirements, BounceBit empowers validators to impose a commission on staking rewards. This pragmatic approach addresses the economic realities of node operation, ensuring validators are adequately compensated for their critical role in maintaining the network’s robustness and functionality.