V. Consensus & Governance: PoW + Conditional Staking

Design Intent

Tondi remains rooted in PoW proof-of-work, the strongest security foundation. On top of this, we add Conditional Staking, a mechanism to constrain and incentivize honest participation in specific scenarios. Thus, PoW ensures chain security and decentralization, while staking provides "bonds" and "verifiable penalties" for key behaviors.

This is not meant to replace PoW's primacy, but to expand governance possibilities without sacrificing decentralization.

Conditional Staking Mechanism

Three-Way Exit Staking Contract

Conditional staking relies on Taproot extension scripts and simple covenant primitives, e.g., via CTV or equivalents, creating a three-way exit staking contract:

Normal exit: Safe withdrawal after agreed maturity
Timeout exit: Reclaim after prolonged inactivity
Penalty branch: Upon submission of verifiable fraud evidence, funds redirected to penalty pool or victim

Emphasis on Verifiability

Verifiability — only on-chain provable facts (e.g., double-signing, conflicting tx) can trigger penalties, avoiding human arbitration.

New Governance Possibilities

With conditional staking, Tondi can support governance scenarios hard to automate on traditional PoW chains:

Infrastructure Guarantees

Relay/observer/channel hubs stake to guarantee service
Malicious/violating behavior penalized via proofs

Cross-chain & Channel Safety

In Eltoo/channel factories, attempts to submit outdated states can be penalized
Removes need for arbitrators through automated penalty mechanisms

Parametric Governance

Protocol parameters (e.g., fee caps, bandwidth allocation) can be modified via staked proposals
Abuse punished by stake slashing

Accountable Governance

Staking makes "commitment with cost" possible — governance becomes binding, not costless signaling
Community accountability through economic incentives

Philosophical Insight

PoW should not be replaced, but neither must it be isolated. With conditional staking, Tondi does not alter PoW's core but adds a flexible governance texture atop its hardened shell.

Core Principles

PoW Primacy: Hashpower remains the primary security mechanism
Governance Enhancement: Staking adds governance capabilities without compromising decentralization
Economic Incentives: Binding commitments through economic stakes
Automated Enforcement: On-chain verifiable facts trigger penalties

Benefits

Network Security: Maintains PoW's proven security model
Sustainable Evolution: Community accountability through economic incentives
Flexible Governance: Supports complex governance scenarios
Decentralization: No central authority required for governance decisions

Implementation Strategy

Phase 1: Foundation

Implement basic conditional staking contracts
Deploy Taproot-based covenant primitives
Establish penalty mechanisms

Phase 2: Governance Expansion

Enable parametric governance through staked proposals
Implement infrastructure guarantees
Deploy cross-chain safety mechanisms

Phase 3: Advanced Features

Complex governance scenarios
Automated penalty enforcement
Community-driven parameter updates

Security Considerations

Fraud Proof Requirements

On-chain verification: All penalties must be verifiable on-chain
No human arbitration: Automated enforcement based on cryptographic proofs
Economic incentives: Sufficient stake to deter malicious behavior

Decentralization Maintenance

No central authority: All governance decisions through decentralized mechanisms
Community participation: Broad participation in governance processes
Transparent processes: All governance actions publicly verifiable