sBTC Transaction Walkthrough

Let's follow the journey of 1 BTC as it moves through the sBTC system, from initial deposit to final withdrawal.

Part 1: Deposit (BTC → sBTC)

1

Initiation

• Alice decides to convert 1 BTC to sBTC to participate in Stacks DeFi.

• Alice creates a deposit transaction on the Bitcoin network (typically via a UI such as the sBTC bridge or a DeFi application).

• The transaction enters the Bitcoin mempool.

2

Proof Submission

• Alice submits proof of her deposit to the Deposit API (usually via the application's UI).

• The Deposit API sets the deposit status to PENDING.

3

Signer Validation

The sBTC Signer Set:

• Detects the deposit.

• Validates the UTXO format.

• Votes on the deposit.

If the deposit is rejected:

• Signers notify the API of the rejection.

• The Deposit API updates the status to FAILED.

If the deposit is accepted:

• The Deposit API updates the status to ACCEPTED.

4

Bitcoin Transaction

If accepted, the sBTC Signer Set:

• Creates a new Bitcoin transaction consuming Alice's deposited BTC.

• Broadcasts this transaction to the Bitcoin network.

If this transaction fails:

• Signers notify the API of the failure.

• The Deposit API updates the status to FAILED.

5

sBTC Minting

Upon successful Bitcoin transaction:

• The sBTC Signer Set interacts with the Stacks blockchain.

• They fulfill the deposit by minting 1 sBTC to Alice's Stacks address.

6

Confirmation

• The Deposit API updates the deposit status to CONFIRMED.

• Alice now has 1 sBTC in her Stacks wallet.

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Part 2: sBTC Usage

Alice can now use her 1 sBTC in the Stacks ecosystem:

• Transfer it to other users via the sbtc-token contract (typically via an application UI).

• Participate in DeFi applications.

• Use it in any application that supports SIP-010 tokens.

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Part 3: Withdrawal (sBTC → BTC)

1

Initiation

• Alice initiates a withdrawal by interacting with the Clarity contract on the Stacks blockchain.

• She specifies her Bitcoin address for the withdrawal.

• If successful, the contract locks her sBTC and the withdrawal status is set to PENDING.

• If the transaction fails, no withdrawal occurs.

2

Signer Validation

The sBTC Signer Set:

• Detects the withdrawal request.

• Decides whether to accept or reject the withdrawal.

If the withdrawal is rejected:

• Signers unlock the sBTC.

• The withdrawal status is updated to FAILED.

If the withdrawal is accepted:

• The withdrawal status is updated to ACCEPTED.

• Signers wait for 6 Bitcoin block confirmations (for security purposes).

3

Bitcoin Transaction

After the waiting period, if accepted:

• The sBTC Signer Set creates a new Bitcoin transaction fulfilling Alice's withdrawal.

• They broadcast this transaction to the Bitcoin network.

If this transaction fails:

• Signers unlock the sBTC.

• The withdrawal status is updated to FAILED.

4

sBTC Burning and Confirmation

Upon successful Bitcoin transaction:

• The sBTC Signer Set burns the locked 1 sBTC on the Stacks blockchain.

• The withdrawal status is updated to CONFIRMED.

5

Completion

• Alice now has her 1 BTC back in her specified Bitcoin address.

• The withdrawn sBTC has been permanently removed from circulation.