5. Smart Contract Design

KTON V2 employs a layered smart-contract stack written in FunC and Tact (for interface contracts). Below we outline the most important components and their security considerations.

5.1 Pool Root Contract

;; simplified pseudo-code
struct PoolRoot {
  owner: address;           ;; Halter / Sudoer
  controller: address;
  jetton_minter: address;
  exchange_rate: uint128;   ;; TON per KTON (µTON precision)
  tvl: uint128;             ;; cached TVL for UI
  halted: bool;
}

Key Functions

• deposit(ton_amount) — Mints ton_amount / exchange_rate KTON and sends to caller.

• redeem(kton_amount) — Burns KTON, returns TON after cooldown or immediately with fee.

• update_rate() — Pulls reward balance from controller and adjusts exchange_rate.

• halt(mode) — Emergency stop toggles (deposit, redeem, both).

• set_controller(addr) — Only via SudoerExecutor.

5.2 Controller Contract

• Maintains validator wallets and dispatches add_stake / recover_stake messages.

• Uses nonce-based replay protection to avoid double stakes.

• Tracks per-validator performance and automatically rotates out underperformers.

5.3 Jetton Minter

• Implements TIP-3.3 with extensions for permit() (EIP-2612-style off-chain approvals).

• Emits Transfer, Mint, Burn events compatible with major indexers.

• Owner set to Pool Root to ensure 1:1 backing.

5.4 Governance Contracts

Governance is split into two layers:

1. Proposal Hub — Receives proposals and stores metadata.

2. Timelock Executor — Queues successful proposals and calls target contracts after the delay.

Planned upgrade: Sub-DAO modules for node-operator whitelisting and risk-parameter committees.

5.5 Security Enhancements (V2 vs V1)

Area	V1	V2
Upgrades	Owner key could upgrade instantly	SudoerExecutor enforces 48 h timelock
Emergency Halt	All-or-nothing pause	Granular mode (deposit / redeem / both)
Treasury	Same owner as pool	Separate contract & key
Error Codes	Generic failure	Descriptive codes + event logs
Gas Limits	Hard-coded	Configurable via governance

5.6 Formal Specification

The protocol invariants are specified in K / Reach style property tests:

1. Total backing: total_kton * exchange_rate <= ton_balance(pool_root)

2. No mint-out-of-thin-air: Only deposit() can call jetton_minter::mint.

3. Slashing isolation: controller may not transfer TON except add_stake and recover_stake.

5.7 Upgrade Procedure

1. Governance proposes a new contract hash and parameters.

2. Proposal accumulates quorum over 7 days (configurable).

3. Timelock (48 h) begins; front-end and social channels broadcast the pending upgrade.

4. Anyone may execute the upgrade after the delay by calling sudoer_executor::execute().

Next: 6. Governance and Tokenomics