Minting/Redemption

User flow for minting/redeeming strBTC

➕ BTC Deposit a.k.a. Minting

1. A user registers their Ethereum address in the UserActivator smart contract via an on-chain transaction.

2. A unique Bitcoin Taproot deposit address is generated using the validators' joint public key + user’s ETH address. The generated address can be double-checked by the user in the UserActivator smart contract.

3. The user sends BTC to this deposit address.

4. Validators detect the BTC deposit, based on Bitcoin on-chain data independently from each other, approve the minting operation, and construct a minting message containing:

   • Incoming Bitcoin transaction hash

   • Transaction output index

   • Amount

   • Users Ethereum address

5. Validators sign the message using FROST and send it to the user.

6. The user submits the message + signature to the strBTC smart contract.

7. Contract verifies the signature and mints an strBTC token to the user's wallet.

📌 All Bitcoin transaction details (transaction hash + output) are marked as “used” to prevent double minting.

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➖ Redemption a.k.a. BTC Withdrawal

1. A user burns strBTC, specifying their Bitcoin payout address. The validity of a Bitcoin address is checked in the strBTC Smart Contract during a burning transaction.

2. The burn transaction is recorded with a unique redemption ID.

3. Validators detect the burn, independently of each other, validate the transaction, and prepare a BTC payout transaction.

4. The redemption ID is inserted in the Bitcoin transaction sequence number to prevent duplicate payouts for the same redemption.

5. A FROST signature is produced and used to sign the Bitcoin transaction.

6. All validators post the resulting payout transaction to the Bitcoin network.