Introduction

The system monitors and collects Keeper's abnormal behavior in real time, and regulates corresponding punishment mechanisms according to the type of abnormal behavior. Anyone can report abnormal behavior of the keeper when they find it happens. Community will vote to decide the final punishment. The punishment mechanism is composed of ordinary punishment and slashing.There are three main types of Keeper abnormal behavior:

1. Keeper is offline for a long time without performing their duty

2. Keeper refuses to sign when there is a mint or redemption taking place, or signs maliciously when no signature is required.

3. The unlikely event when a group of randomly selected Keepers manage to coordinate and transfer part of the BTC under their custody without authorization.

Downtime Punishment

When a Keeper is offline less than 18 hours:A Coordinator will notify the Keeper as soon as possible after being offline, blocking the Keeper from claiming rewards, staking and unstaking. No rewards will be deducted if the Keeper is back online, and rewards will still be distributed. Rewards during the offline period can also be claimed.When a Keeper has been offline for more than 18 hours:

1. A Coordinator will announce the address of the offline Keeper and the offline time.

2. Anyone can report the offline Keeper after staking DCS.

3. The Keeper should provide online proof after receiving reports.

4. If the Keeper can not provide the proof, or the proof provided is invalid, the report will take effect after 12 hours. If the Keeper provides valid online proof, the report will be invalidated and the DCS staked by the whistleblower will be deducted as community contribution fund.

5. After the report takes effect, the offline Keeper will be kicked out of the Keeper set. 4000DCS and unclaimed rewards before settlement will be deducted. The Keeper will be prohibited from re-entering the set again and will not be able to claim the rewards until it comes back online.

6. A Coordinator will announce the results of the report and punishment, and then return the DCS staked to the whistleblower and send 4000 DCS as reward.

Slashing

When malicious behavior has been proven, staked assets of the keeper will be liquidated in the form of an auction after the community proposes and votes with authorization. The funds obtained from the auction are used to cover the system loss caused by Keeper's malicious behavior, which is generally less than the staked asset. The Keeper will be slashed mainly for transferring funds, malicious signatures, refusing signatures, etc.

1. The system monitors the Keeper's abnormal behavior

2. Chill contract will freeze the permission of the group where the evil keeper is located and stop sending online proofs to the keeper. Permission includes mint and redemption.

3. Keeper's behavior, evidence, process and results will be publicized in the community. If the community receives no objection to the processing results in 24 hours, the punishment will be executed. If there is objection, a community vote will be initiated.

4. The amount of BTC to be repaid and the amount of assets staked by the evil Keeper will be recorded by the contract.

5. A liquidation contract will be created. The staked assets of the evil Keeper will be transferred to the contract. A liquidation auction will be conducted.

6. Rules of liquidation contract

   1. The staked assets of the evil Keeper will be swapped into Sats.

   2. Assets will be auctioned from the original price, with prices decreasing linearly over time.

   3. The proceeds from the auction will be burned to balance the system's pledge and circulation volumes.

   4. Anyone can participate in the auction and bid as they wish.