Validator Rotation and Key Management

In the TON network, validators are rotated every 18 hours as part of the regular consensus mechanism. Since the TON Teleport BTC system relies on validators to generate and manage the distributed key used for signing Bitcoin transactions, the keys must also be updated every 18 hours to ensure consistency and security. This means that the deposit addresses, which are derived from these keys, will also change with each new set of validators.

Whenever the set of validators changes, a new DKG process is initiated to create a fresh public key. The new key is then used for all subsequent peg-in and peg-out operations. After the DKG process is completed and the new key is established, validators need to consolidate all available UTXOs associated with the previous key and move them to a new address controlled by the new key. This process ensures that all Bitcoin funds are securely managed by the updated set of TON validators and that the old key is no longer in use.

One of the primary concerns during key rotation is the handling of Bitcoin transaction fees. When validators move funds from the old bank address to the new one, there are two approaches for managing transaction fees:

The decision on whether to implement a zero-fee approach or a dedicated fee mechanism is left to the TON validators, who can decide through consensus. TON validators can adjust the base fee rate, determine the allocation of collected fees, and establish guidelines for handling Bitcoin transaction costs during key rotation. This flexibility ensures that the system can adapt to changes in the Bitcoin network, such as fluctuating fees or changes in miner behavior.

The automatic transition process, including the reallocation of UTXOs and the regeneration of keys, occurs seamlessly, minimizing disruptions to users. Throughout this process, the system’s state remains synchronized, and all ongoing operations continue as expected, maintaining the trustless nature of the system.