tSAT Whitepaper

Abstract

This whitepaper details the technical implementation of tSAT using the Fixed Ratio Trading (FRT) protocol on Solana, which ensures zero-slippage, predictable exchanges between tBTC and tSAT at a fixed ratio of 1 tBTC = 100,000,000 tSAT.

Introduction

The Problem: Bitcoin's Decimal Complexity

Bitcoin's current representation creates psychological barriers to adoption and engagement:

• Scientific notation confusion: Users see amounts like 1×10⁻⁵ BTC instead of intuitive whole numbers
• Decimal intimidation: Small decimal amounts (0.00001 BTC) feel insignificant despite real value
• Progress invisibility: Growth in tiny decimals is hard to perceive and celebrate
• Mental math complexity: Calculating with 8 decimal places is error-prone

The Solution: Satoshi-Native Representation

tSAT addresses these issues by:

• Whole number psychology: 1,000 tSAT feels more substantial than 0.00001 BTC
• Clear progress tracking: Users can easily see their satoshi stack growing
• Simplified mental math: Working with whole numbers reduces errors
• Maintained Bitcoin exposure: Full 1:1 backing ensures no dilution of Bitcoin value

Why Solana?

Solana provides the ideal infrastructure for tSAT:

• Low transaction costs: Enables micro-transactions in satoshi amounts
• High throughput: Supports high-frequency satoshi transfers
• Mature DeFi ecosystem: Rich tooling for smart contract development
• Threshold Network integration: Native tBTC support for Bitcoin backing

Protocol Design

Fixed Ratio Trading (FRT) Architecture

tSAT is built on the Fixed Ratio Trading protocol, which provides:

Token Ratio Specification

Smart Contract Components

1. Fixed Ratio Trading Pool

The core smart contract that:

• Maintains the 1:100,000,000 tBTC:tSAT ratio
• Processes swaps with zero slippage
• Locks tBTC reserves as backing for tSAT
• Enables instant bidirectional conversion

2. Liquidity Provider (LP) Token System

Dual LP token architecture:

• LP-tBTC tokens: Claims on tBTC side of the pool
• LP-tSAT tokens: Claims on tSAT side of the pool
• Burned LP tokens: All LP tokens permanently destroyed to lock reserves

3. Governance Controls

Multi-signature governance system:

• Upgrade authority: Transferred to multi-sig address
• Emergency controls: Protocol pause capabilities
• Fee management: Currently 0%, governance-controlled
• Treasury management: All fees flow to governance PDAs

Smart Contract Implementation

Contract Addresses

Key Smart Contract Features

Immutable Core Logic

The FRT smart contract implements immutable core functions:

// Pseudo-code representation
function swap_tbtc_to_tsat(tbtc_amount) {
    tsat_amount = tbtc_amount * 100_000_000;
    require(pool_has_tsat_liquidity(tsat_amount));
    transfer_tbtc_from_user(tbtc_amount);
    transfer_tsat_to_user(tsat_amount);
    emit SwapEvent(tbtc_amount, tsat_amount);
}

function swap_tsat_to_tbtc(tsat_amount) {
    require(tsat_amount % 100_000_000 == 0); // Ensure whole tBTC
    tbtc_amount = tsat_amount / 100_000_000;
    require(pool_has_tbtc_liquidity(tbtc_amount));
    transfer_tsat_from_user(tsat_amount);
    transfer_tbtc_to_user(tbtc_amount);
    emit SwapEvent(tsat_amount, tbtc_amount);
}

Security Validations

• Ratio enforcement: Mathematical precision ensures exact 1:100,000,000 ratio
• Overflow protection: SafeMath operations prevent arithmetic errors
• PDA validation: All Program Derived Addresses properly verified
• Access control: Proper permission checks on all functions

Liquidity Management

The smart contract manages liquidity through:

• Asymmetric deposits: Users can deposit only tBTC or only tSAT
• Balanced withdrawals: LP token holders can withdraw proportional shares
• Reserve tracking: Real-time monitoring of backing ratios
• Emergency pause: Circuit breakers for critical situations

Security Model

Multi-Layer Security Architecture

1. Smart Contract Security

• Formal verification: Mathematical proofs of ratio correctness
• Overflow protection: SafeMath prevents arithmetic vulnerabilities
• Reentrancy guards: Protection against recursive call attacks
• Input validation: Comprehensive parameter sanitization

2. Economic Security

• Full collateralization: Every tSAT backed by tBTC in smart contract
• Burned LP tokens: Reserves permanently locked, no admin access
• Transparent reserves: Real-time on-chain verification
• No fractional reserves: 1:1 backing ratio maintained at all times

3. Governance Security

Risk Mitigation Strategies

Smart Contract Risks

tBTC Backing Risks

Liquidity Risks

Audit & Verification

Security verification through multiple channels:

• Community auditing: Open source code review
• AI-powered analysis: Automated vulnerability scanning
• Formal verification: Mathematical proof of correctness
• Real-time monitoring: On-chain reserve tracking

Tokenomics

Supply Mechanics

Economic Model

Supply Constraint Economics

Circulation Dynamics

tSAT circulation is determined by market demand:

• Minting: Users deposit tBTC → receive tSAT at 1:100M ratio
• Burning: Users return tSAT → receive tBTC at 100M:1 ratio
• Net circulation: Difference between minted and burned tokens
• Market forces: Supply/demand balance determines actual circulation

Fee Structure

Circulating Supply API

Real-time circulating supply data is available through public API endpoints:

API Response Format

The JSON endpoint provides comprehensive supply data:

{
  "circulating_supply": 80195953,
  "total_supply": 21000000000000,
  "locked_in_pool": 20999919804047,
  "timestamp": 1759477338,
  "last_updated": "2025-10-03T07:42:18+00:00",
  "pool_address": "AnTuW1uDnQBnwSa2Yso8MFmknz8B3K4V1iZZNdMdEXNj",
  "tsat_token": "tSATdGGSLYBVCrm3pXiib8NmzKcB1iUdjRRseNGssxu",
  "rpc_provider": "chainstack"
}

Integration Examples

Perfect for CoinGecko, CoinMarketCap, and other data aggregators:

• CoinGecko format: Returns plain number for easy integration
• Real-time data: Updates every 5 minutes with live Solana RPC calls
• Transparent calculation: Total Supply - tSAT locked in pool = Circulating Supply
• Fallback protection: Multiple RPC endpoints ensure reliability

Value Proposition

For Bitcoin Holders

• Psychological benefits: Whole number satoshi representation
• Maintained exposure: Full Bitcoin price correlation
• DeFi utility: Use Bitcoin in Solana ecosystem
• Instant liquidity: Convert back to tBTC anytime

For DeFi Users

• Bitcoin integration: Native Bitcoin exposure in Solana DeFi
• Micro-transactions: Trade small Bitcoin amounts efficiently
• Composability: Building block for other protocols
• Predictable pricing: No slippage on conversions

Proof of Reserves

All tSAT tokens are verifiably backed by tBTC reserves locked in the Fixed Ratio Trading smart contract. The complete transaction history demonstrates the security and transparency of the system:

Real-Time Verification

Anyone can verify the backing at any time:

• Pool reserves: Check FRT pool balance on Solscan
• Token supply: Monitor circulating vs total supply
• Backing ratio: Verify 1:1 tBTC backing for all circulating tSAT
• LP token status: Confirm all LP tokens remain burned

How to Redeem tSAT for tBTC

Step-by-Step Redemption Guide

Method 1: Using FRT15.net Interface

1. Connect Wallet: Visit frt15.net and connect your Solana wallet
2. Select Pool: Navigate to the tSAT/tBTC trading pool
3. Choose Swap Direction: Select tSAT → tBTC conversion
4. Enter Amount: Input the amount of tSAT you want to redeem
5. Verify Rate: Confirm the 100,000,000:1 conversion ratio
6. Execute Swap: Submit the transaction and confirm in your wallet
7. Receive tBTC: tBTC will be deposited to your wallet instantly

Method 2: Direct Smart Contract Interaction

Advanced users can interact directly with the smart contract:

// Contract Address: AnTuW1uDnQBnwSa2Yso8MFmknz8B3K4V1iZZNdMdEXNj
// Function: swap_tsat_to_tbtc
// Parameters: tsat_amount (must be multiple of 100,000,000)

Example:
- Input: 500,000,000 tSAT
- Output: 5 tBTC
- Fee: ~0.0002715 SOL (network fee only)

Redemption Requirements

Redemption Guarantees

Liquidity Considerations

Redemption depends on available tBTC liquidity in the pool:

• Current liquidity: Check pool reserves before large redemptions
• Market dynamics: Liquidity varies based on user deposits/withdrawals
• Arbitrage opportunities: Price deviations may attract liquidity providers
• Alternative markets: tSAT may trade on other DEXs if pool liquidity is low

Risks & Disclaimers

Smart Contract Risks

Code Vulnerabilities

• Bug risk: Smart contracts may contain undiscovered vulnerabilities
• Upgrade risk: Protocol upgrades could introduce new issues
• Interaction risk: Complex interactions with other protocols may cause failures
• Network risk: Solana network issues could affect functionality

Mitigation Measures

• ✅ Open source code for community auditing
• ✅ Formal verification of core mathematical functions
• ✅ Multi-signature governance for upgrades
• ✅ Extensive testing on devnet/testnet

Economic Risks

Liquidity Risks

tBTC Backing Risks

• Threshold Network dependency: tSAT inherits all risks of the underlying tBTC system
• Bitcoin bridge risks: tBTC's Bitcoin backing mechanism could face technical issues
• Signer set risks: Threshold Network's decentralized signers could face coordination issues

Regulatory Risks

Compliance Considerations

• Jurisdictional variations: Cryptocurrency regulations vary by location
• Classification uncertainty: Token classification may change over time
• User responsibility: Users must ensure compliance with local laws
• Platform restrictions: Some platforms may restrict tSAT trading

Technical Risks

Infrastructure Dependencies

Market Risks

Price Correlation

Liquidity Market Risks

• Secondary market deviation: tSAT may trade at premium/discount on other DEXs
• Arbitrage delays: Price corrections may take time during high volatility
• Market fragmentation: Liquidity may be split across multiple venues

Legal Disclaimers

Limitation of Liability

The tSAT protocol developers, contributors, and associated parties:

• Make no warranties about the software or its functionality
• Accept no liability for any losses or damages
• Provide the protocol "as is" without support guarantees
• May discontinue development or support at any time

User Responsibilities

By using tSAT, users acknowledge they:

• Have read and understood all risks and disclaimers
• Are legally permitted to use cryptocurrency in their jurisdiction
• Will not hold developers liable for any losses
• Accept full responsibility for their trading decisions
• Will conduct their own due diligence and risk assessment