Lombard Ledger (Consortium)

Lombard Protocol is anchored by its Security Consortium, comprised of members who validate and sign critical operations. The Security Consortium’s primary activity is to validate Lombard Ledger, a Cosmos app-chain operating via Proof-of-Authority. The Security Consortium is unique in the blockchain space, and ensures every transaction on the Lombard Protocol is validated transparently by multiple independent parties.

Lombard Ledger provides a robust governance for the Lombard Protocol, enabling clear on-chain verifiable records of all operations and Security Consortium member activity. Lombard Ledger also acts as a platform for the collection & distribution of BSN rewards.

Security Consortium in Lombard's Architecture

The Security Consortium is a decentralized state machine deployed on a trusted network of nodes that uses CometBFT to reach consensus. The Consortium performs the following actions to handle these processes:

1. Create a New Deposit Address:

   • CubeSigner-Managed BTC Address: When a staker requests to make a deposit, the Consortium creates a new BTC key—and address—managed by CubeSigner in secure hardware.

2. Verify Deposits and Produce Signed Data:

   1. Check Deposit Transaction Existence: Confirm that the deposit transaction exists on the Bitcoin blockchain.

   2. Confirm Transaction: Ensure that the transaction has been confirmed with the required number of confirmations.

   3. Validate BTC Amount: Verify that the transaction includes the BTC amount.

   4. Point to Deposit Address: Ensure that the transaction points to the correct deposit address.

   5. Produce Signed Data: Once the deposit is verified, generate the signed data that points to the selected blockchain where the user will claim the LBTC.

3. Stake and Unstake BTC:

   • Select Providers: The Consortium selects appropriate finality providers for staking.

   • Stake BTC: Stake BTC to the finality providers.

   • Unstake BTC: Unstake BTC from the finality providers.

4. Mint and Burn LBTC:

   • Select Deposit Address: User provides address to mint LBTC on for corresponding amount of staked BTC.

   • Mint LBTC: Consortium's BTC nodes verify that the staking transaction exists, and has received 6 confirmations, after which, provides a signature enabling the minting of LBTC.

   • Burn LBTC: User calls redeem on the LBTC smart contract, specifying the BTC redemption address & the amount of LBTC to redeem. The corresponding LBTC is burned, and the Consortium provides signatures for pay out from CubeSigner.

5. Pay Out Unstaked BTC:

   • Pay out Process: Once BTC is unstaked from Babylon, the Consortium handles the payout of the unstaked BTC back to the user.

Requirements to be a Consortium Member

Currently, becoming a Consortium member entails the following steps:

1. Infrastructure Rollout: The new Consortium member deploys their required infrastructure (Lombard Ledger node, CubeSigner, Bitcoin and destination chain nodes).

2. New Member Review Process: The new member exchanges their public keys and organizational details with existing Consortium members. The existing Consortium members review the request to add a new Consortium member (including independent KYB checks).

3. New Member Joins Network: The existing Consortium members vote to add the new Consortium member to the Proof-of-Authority network.

4. Smart Contracts Update: The Lombard Protocol multisig wallet updates the Consortium Smart Contracts to include the new members' public address for signature verification.