Custodian Setup

Stroom MVP architecture: a secure custodian-based setup for yield-generating Bitcoin LST

Stroom is an economically secured, yield-bearing Bitcoin that enables native BTC yield through a phased, trust-minimized architecture. In its MVP phase, Stroom operates under a cooperative model involving trusted custodians and professionally hosted Lightning Network infrastructure to bootstrap liquidity and DeFi integrations, and to validate the system’s core mechanics before full decentralization.

🧱 Architecture Overview

Key Components

  • Custodian: Trusted entity responsible for BTC custody and Lightning node operations.

  • LN infrastructure provider: a professional Lightning Network node host

  • Stroom Protocol: Manages smart contracts, strBTC minting, and yield distribution.

  • Whitelisted Liquidity Providers (LPs): Supply BTC and receive strBTC in return.

  • Middleware: Enforces strict access control between Stroom and Custodian systems.

  • Lightning Channels Curator: Executes channel strategy and yield logic.

🔹 Custodian

The Custodian is a trusted infrastructure operator responsible for:

  • Hosting and operating Lightning Network Daemon (LND) nodes through LN infrastructure provider.

  • Processing BTC deposits and redemptions from LPs.

  • Holding node credentials and signing authority for secure operations.

  • Ensuring high uptime and reliability through third-party infrastructure such as Voltage.cloud.

The Custodian ensures that BTC liquidity is appropriately managed and available for active routing across the Lightning Network.

🔹 LN Infrastructure Provider A specialized third-party entity that hosts and maintains the Lightning Network nodes used by the Custodian. Responsibilities include:

  • Providing secure, high-availability infrastructure optimized for Lightning Network operations.

  • Managing physical and cloud-based resources to ensure uptime, scalability, and low latency.

  • Handling node maintenance, monitoring, backups, and upgrades.

  • Enforcing security best practices to protect node credentials and prevent downtime or attacks.

  • Collaborating with the Custodian to ensure smooth channel operations and reliable liquidity routing.

This professional hosting service allows the Custodian to focus on BTC custody, the Channel curator to focus on strategic channel management, while relying on the LN infrastructure provider for robust node operation.

🔹 Stroom Protocol

Stroom acts as the protocol orchestrator, responsible for:

  • Deploying and maintaining smart contracts (e.g., strBTC, wstrBTC, and supporting infrastructure) on Ethereum and other EVM-compatible chains.

  • Minting strBTC, the yield-bearing token representing BTC deposits.

  • Managing yield payout logic based on Lightning Network routing performance.

During the MVP phase, only whitelisted LPs are eligible for Lightning-based rewards. In future phases, yield distribution will be open to all strBTC holders.

🔹 Whitelisted Liquidity Providers (LPs)

Whitelisted LPs are authorized participants who:

  • Deposit BTC into custodian-managed Lightning accounts.

  • Receive strBTC tokens on Ethereum in return.

  • Accrue yield and points for both BTC contribution and strBTC DeFi usage.

🔹 Middleware

Middleware provides a critical security and access control layer between Channel Curator and the Custodian’s LND nodes. It is designed to:

  • Limit RPC access to only essential functions required for yield strategy execution.

  • Prevent unauthorized actions, such as --push_sat when opening LN channel.

  • Enforce role separation — allowing Channel Curator to manage strategy logic without having withdrawal rights or direct control over BTC.

This isolation ensures the security of BTC even if the channel management system is compromised.

🔹 Stroom Lightning Channel Manager

This module operates Stroom’s yield-generation logic, interacting with the Custodian's LND node via Middleware. Its responsibilities include:

  • Opening and balancing channels to maximize routing revenue.

  • Monitoring performance metrics.

  • Adjusting channel fees dynamically.

  • Initiating closures when strategically necessary.

Notably, Stroom Channel Manager never holds BTC funds or private keys. It only operates programmable infrastructure to implement yield strategies.

It acts as a non-custodial controller, submitting instructions without ever accessing private keys or BTC directly.

🪙 Yield & Rewards

Whitelisted LPs earn:

  • strBTC yield from Lightning Network routing fees.

  • Stroom points, rewarding early BTC contributions.

  • DeFi points, incentivizing the use of strBTC in DeFi protocols.

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