Portal Network Participants

Traders (Takers)

Traders are also asset holders and use Swap Clients to interact with the Portal Network. They use clients to place swap orders. Traders agree to a quote and can sign transactions proving ownership of the token and payments. All trades happen to be Layer 2 Atomic Swaps between the corresponding blockchains. Validators (described below) undertake the task of routing orders and maintaining the decentralized order book. Traders specify acceptable slippage on swap_intent() function call.

Liquidity Providers ( LPs )

Entities become liquidity providers (LPs) by staking a small percentage of the asset they intend to sell. This stake is stored on the native Layer 1 (L1) blockchain and is subject to forfeiture if the LP fails to fulfill their commitment.

Liquidity providers commit assets to liquidity pools with the aim of participating in a specific swap direction for a particular pair of assets. For instance, an LP might supply ETH with the intention of selling it to acquire BTC. LPs can engage in one or more liquidity pools, which are managed by the ADMM smart contract on the Notary Chain. LPs receive notifications for each swap and can adjust their liquidity position or update it at any time, irrespective of swap activity.

Compensation for LPs is derived from the spread between the assets being swapped, determined by set_LPprice(). LPs must maintain accounts on both the buying and selling chains. Parameters such as Liquidity Asset, Receiving asset, and price range guide LPs in setting up their liquidity. The LP, or group of LPs, offering the best price with sufficient liquidity is selected for a swap.

Validators

Validators provide bonded assets and run PortalOS nodes, which empowers the Portal Network by facilitating interchain co-ordination and cross-chain asset balance tracking. A significant component of PortalOS is the Portal Notary Chain. While Portal Network is a Proof-of-Stake, it is implemented using a EVMOS, built on Cosmos, which uses CometBFT consensus to achieve fast finality (a distributed, Byzantine fault-tolerant, deterministic state machine replication engine). This also makes the network resistant to node failures and potential attacks.

Although its nodes run the same software as Ethereum networks, the Notary Chain is separate from, and completely independent of, all Ethereum networks. The ADMM smart contract, which initiates and manages swaps, executes on the Notary Chain. This contract matches counterparties and determines the parameters of each swap, e.g. prices, amounts, etc. The transactions activating this contract and its output are recorded in the blocks of the Notary Chain which result from consensus between the validators.

To become a Validator, one must win the slot in an auction process (described in detail in the Validator section below). Only auction winners are permitted to participate in the process, with one validator chosen (in a round-robin manner) to act solely as the block generator or broadcaster. Block rewards are evenly distributed among all validators, and the broadcaster is determined by being the highest bidder in the previous auction. In case of equal bids, validators take turns becoming broadcasters based on their bid amounts—a system similar to Ethereum's Proof-of-Stake mechanism.

Apart from witnessing transactions within the Portal Network, validators also manage a "Coordinator" This module actively listens for and responds to events originating from Layer 1 and Layer 2 networks, facilitating the exchange of assets. Considering the limitations of the Bitcoin Virtual Machine in executing smart contracts, the DEX server additionally provides endpoints for traders to initiate BTC sales.

Some key aspects about Validators:

• The protocol's active validator set, potentially composed of at least 21 validators (subject to adjustments from testnet simulations), collaboratively manages the Notary Chain based on their stake holdings.

• All validator slots operate on a permissionless basis, allowing any validator operator with sufficient $XPORT token to outbid others and secure a position within the validator set by winning slots through regular auctions.

• Each individual validator possesses its unique set of Private Keys, utilized to generate an aggregate Public Key per epoch and contribute to the consensus process within the Notary Chain.

• Validators create secrets at the onset of each epoch, serving specific functions such as operating a hub for multi-party channels on Bitcoin and owning Smart Contract on other chains like Ethereum.

The Validator Set's role on the Notary Chain includes:

• Attestation:

  • Maintain and update the Notary Chain through a Proof-of-Stake Consensus.

  • Achieve consensus regarding incoming deposits and record them on the blockchain..

  • Achieve consensus on the proposed transactions to be signed and broadcast.

• Settlement:

  • Engage in Threshold Signature Scheme (TSS) key generation ceremonies to take ownership of multi-party hub contracts on Bitcoin and Smart Contracts (EVM and like).

  • Participate in TSS Signing ceremonies to register and broadcast transactions between swapping parties.

Because of the functions performed, Validators are awarded $XPORT tokens every block, with the ability to receive the tokens at the end of the epoch. Each epoch is 1 month to 1 quarter. More information about $XPORT tokens can be found in the token section.