TL;DR

• Users lock BTC on Bitcoin to mint tgBTC and burn tgBTC on TON to redeem BTC on Bitcoin.
  
• A Bitcoin SPV light client implemented in TON contracts autonomously verifies block headers.
  
• DKG and FROST threshold signatures let rotating validators produce a single Bitcoin transaction signature.
  
• Transaction fees are minimized through CPFP Progressive Fee Model and batched peg‑outs every two hours.

Declaration of Trustlessness

Trustless architectures eliminate intermediaries by enforcing every operation through transparent consensus and immutable code. In Satoshi Nakamoto’s words:

“What is needed is an electronic payment system based on cryptographic proof instead of trust…”

TON Teleport BTC applies this core principle end‑to‑end. No external oracles, no custodians — only smart contracts, validator consensus, and cryptographic verification govern each peg‑in and peg‑out.

System Overview

At its core, TON Teleport BTC provides two seamless flows between Bitcoin and TON. First, users peg in, moving BTC from the Bitcoin network to TON and receiving one‑to‑one tgBTC. Then, users peg out, burning tgBTC on TON to reclaim real BTC on Bitcoin. All transfers occur via on‑chain SPV verification, smart contracts and threshold signatures.

Key components:

1. Bitcoin SPV Light Client: Implemented as TON smart contracts, it stores and validates Bitcoin block headers, PoW proofs, and Merkle inclusion proofs directly on TON.
   
2. Peg‑in Contracts: Automatically issue tgBTC when on‑chain SPV verification and a configurable number of confirmations are met.
   
3. Peg‑out Contracts: Consolidate UTXOs, assemble Bitcoin transactions, and coordinate threshold signing via DKG & FROST among validators.
   
4. Governance & Upgrades: Every 18 hours validators run a fresh DKG to update signing keys. Contracts can then be upgraded through validator quorum without hard forks.

Peg‑in Flow: Minting tgBTC

When you peg in, TON Teleport BTC:

1. Generates a unique deposit address on Bitcoin linked to your TON account and optionally protected by a CSV refund script.
   
2. Tracks your BTC transfer and waits for six confirmations via the SPV client to ensure block finality.
   
3. Verifies proof‑of‑work, chain continuity and Merkle inclusion on TON.
   
4. Mints tgBTC in a one‑to‑one ratio to your TON address once all proofs pass.

This fully automated flow eliminates human error, censorship and third‑party risk.

Peg‑out Flow: Redeeming BTC

When you peg out, TON Teleport BTC:

1. Burns your tgBTC in the withdrawal contract and captures your Bitcoin destination address.
   
2. Consolidates all pending UTXOs into one Bitcoin transaction to optimize fees.
   
3. Runs Distributed Key Generation among validators every eighteen hours to create a shared public key.
   
4. Uses FROST to aggregate individual validator signature shares into a single Schnorr signature.
   
5. Broadcasts the signed Bitcoin transaction; once mined, BTC arrives at the specified address.

No single validator can withdraw funds alone. Security is ensured by threshold consensus.

Fee Optimization

TON Teleport BTC keeps fees minimal by combining multiple strategies. Child‑Pays‑For‑Parent incentives let later high‑fee withdrawals pull earlier low‑fee transactions into blocks. A Progressive Fee Model, set on‑chain by validators, scales the base fee to deter spam. Withdrawals execute every two hours in a single batched transaction, spreading costs across users. Users may also choose custom fees or wait for low‑fee windows to balance speed and cost.

Governance & Upgrades

Validators rotate signing keys every 18 hours on mainnet via DKG. They maintain upgradeability by pushing contract changes through quorum without hard forks. Validators also adjust fee parameters on‑chain and can activate CSV or password‑protected refunds for any expired deposit addresses, ensuring continuous improvement and resilience.

Ecosystem Impact

By bringing BTC liquidity to TON, tgBTC enables:

• DeFi applications: DEXs, lending, and yield farming backed by Bitcoin.
  
• Cross‑chain templates: A blueprint for trustless bridges to EVM networks.
  
• Mass‑market use: Users can send Bitcoin as easily as a chat message and stake, trade or farm in a single wallet, paving the way for mass adoption.

Some thoughts

TON Teleport BTC establishes a new paradigm for cross chain interoperability fully trustless, decentralized and secure By integrating an on chain SPV client leveraging DKG and FROST and optimizing fees RSquad delivers robust infrastructure for Bitcoin on TON.