How Self-Custodial Bitcoin Staking Works

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CLTV Timelock Mechanism

CheckLockTimeVerify (CLTV) is a Bitcoin-native function that locks transaction outputs until a specified time or block height. When you create a CLTV transaction:

• Bitcoin remains locked in your wallet for the specified duration
• No third party can access your Bitcoin during the lock period
• You retain full custody throughout the entire process
• After expiration, you must send a redeem script to regain spending ability

Staking Process Overview

1. Create timelock transaction with CLTV on Bitcoin blockchain
2. Include metadata specifying validator delegation and reward address
3. Core relayers detect valid staking transactions on Bitcoin
4. Earn CORE rewards based on validator performance and staked amount
5. Redeem Bitcoin after timelock expires using redeem script

Security Model

Zero Custodial Risk: Your Bitcoin never leaves the Bitcoin blockchain or your control. The staking mechanism uses only Bitcoin-native functions without introducing additional trust assumptions.

Key Security Guarantees:

• Bitcoin remains in your wallet throughout staking
• No protocol-level risk beyond Bitcoin's native security
• No third-party custody or smart contract risk
• Validator misbehavior cannot affect your Bitcoin principal

Technical Requirements

Transaction Structure

Your CLTV staking transaction must include:

Required Outputs:

• CLTV timelock output: Locks your Bitcoin for specified duration
• OP_RETURN output: Contains delegation metadata

Metadata Format (in OP_RETURN):

• Core validator address (delegation target)
• CORE reward address (where to send rewards)

Minimum Requirements

Method	Minimum BTC	Minimum Duration
Official UI	0.01 BTC	5 days
Direct scripting	No minimum	24 hours (recommended)

Cross-Chain Operations

Step	Bitcoin Network	Core Network
Initiate	User creates CLTV transaction with delegation metadata	Relayers monitor for valid staking transactions
Timelock	Bitcoin locked in user's wallet, transaction confirmed	Relayers validate and register staking position
Earn	Bitcoin remains locked and secure	CORE rewards accrue based on validator performance
Redeem	User sends redeem script to unlock Bitcoin	Relayers update staking records

Transaction Workflow

Timeline and Activation

Confirmation Process

1. Transaction broadcast: CLTV transaction sent to Bitcoin network
2. Bitcoin confirmation: ~60 minutes (6 blocks) for recognition
3. Core detection: Relayers identify valid delegation
4. Reward activation: Next validator election round (~24 hours from UTC+0)

Example Timeline If you stake Bitcoin at 6:00 AM UTC+0:

• Bitcoin confirmation: Same day after 6 blocks
• Staking becomes active: 12:00 AM UTC+0 next day
• Rewards begin accruing: From first active round

Best Practices

Transaction Fees

• Use competitive fees: Low fees cause confirmation delays
• Monitor network congestion: Adjust fee rates accordingly
• Consider RBF: Enable Replace-By-Fee for fee adjustments

Handling Delays

• Transaction accelerators: Use services like viaBTC if stuck
• Fee bumping: Increase fees on pending RBF transactions
• Patience: Low-fee transactions may take days during congestion

Validator Selection

Choose validators based on:

• Performance history and uptime
• Commission rates
• Community reputation

Redelegation vs Redemption

Redemption: Unlock Bitcoin for general use

• Requires redeem script after timelock expires
• Bitcoin becomes fully spendable again

Redelegation: Switch to different validator without unlocking

• Can be done directly without redemption
• Maintains staking position with new validator

API and Data Access

Staking data becomes available via Core Staking API once:

• Bitcoin transaction is confirmed (6 blocks)
• Relayers have processed the delegation
• Staking position is active in validator elections

This allows developers to track staking positions, rewards, and validator performance programmatically.

For a detailed guide on staking transaction design, refer here.