Validator Network

The Validator Network is a critical component of the Xylem Protocol that ensures transactions follow protocol rules without taking custody of users’ assets. Unlike other protocols that may use FROST DKG (Flexible Round-Optimized Schnorr Threshold Distributed Key Generation), Xylem employs a simpler yet robust approach.

How Our Validator Network Works

Instead of relying on FROST DKG, the Xylem validator network uses a simpler multi-signature approach with the following key features:

1. Direct Multi-signature Validation: Each validator independently validates transaction requests against protocol rules
2. No Shared Key Material: Validators maintain individual keys and do not participate in distributed key generation
3. M-of-N Consensus: Transactions require signatures from a threshold of validators (e.g., 7-of-10) to be valid
4. Individual Accountability: Each validator’s actions are attributable and auditable on-chain

Benefits of Our Approach

By not using FROST DKG, the Xylem validator network offers several advantages:

1. Simplicity: Easier to implement, audit, and understand
2. Reduced Complexity: No complex key generation ceremonies or specialized cryptography
3. Direct Accountability: Clear attribution of validator actions
4. Individual Key Management: Validators can employ their own security practices
5. Dynamic Validator Rotation: Easier to add or remove validators through governance

Validator Selection

Validators are selected through a governance process by XYLEM token holders. The protocol uses the following criteria for validator selection:

1. Technical reliability and uptime
2. Geographic distribution
3. Institutional diversity
4. Security practices
5. Reputation and track record

Security Model

The security of the validator network relies on:

1. Threshold Security: Requiring M-of-N validators prevents a small number of malicious validators from compromising the system
2. Economic Incentives: Validators are incentivized to follow protocol rules
3. Transparent Verification: All validator actions can be independently verified on-chain
4. Regular Rotation: The validator set is periodically reviewed and can be adjusted through governance

The validator network interacts with the Transaction Builder to process user requests for creating vaults, minting XYM, repaying debt, and other protocol functions in a secure and decentralized manner.