doc: Spec of finality vote submission

CHANGELOG.md

@@ -37,6 +37,11 @@ The format is based on [Keep a Changelog](https://keepachangelog.com/en/1.0.0/)
 
 ## Unreleased
 
+### Documentation
+
+[#120](https://github.com/babylonlabs-io/finality-provider/pull/120) Spec of
+finality vote submission
+
 ## v0.11.0
 
 ### Improvements

docs/send-finality-vote.md

@@ -0,0 +1,99 @@
+# Finality Votes Submission Specification
+
+## Overview
+
+Finality providers submit votes to finalize blocks on the consumer chain.
+This document specifies the process of submitting finality votes.
+
+## Submission Process
+
+### Internal State
+
+The finality provider maintains a persistent state variable `lastVotedHeight`
+to track the most recent height where a finality vote was successfully submitted
+This is to prevent voting for a previously voted height.
+
+### Bootstrapping
+
+To determine the initial processing height `startHeight`:
+
+1. Query consumer chain for:
+   - `lastFinalizedHeight` (defaults to `0` if no blocks are finalized)
+   - `finalityActivationHeight`
+   - `lastVotedHeightRemote` (defaults to `0` if no votes exist)
+
+2. Synchronize local state:
+   - Verify local `lastVotedHeight` >= `lastVotedHeightRemote`
+   - If verification fails, update local state to match remote
+
+3. Calculate starting height based on reward distribution policy:
+   - If rewards are available for already finalized blocks:
+
+     ```go
+     startHeight = max(lastVotedHeight + 1, finalityActivationHeight)
+     ```
+
+   - If rewards are only for unfinalized blocks:
+
+     ```go
+     startHeight = max(lastFinalizedHeight + 1, finalityActivationHeight)
+     ```
+
+The choice between using `lastVotedHeight` or `lastFinalizedHeight` depends on
+the consumer chain's reward distribution mechanism.
+Use `lastVotedHeight` if the chain allows collecting rewards for already
+finalized blocks. Otherwise, use `lastFinalizedHeight` to only process
+unfinalized blocks.
+
+### Normal Submission Loop
+
+After the finality provider is bootstrap, it continuously monitors for
+new blocks from a trusted full node of the consumer chain.
+For each new block, it performs these validation checks:
+
+1. Block hasn't been previously processed
+2. Block height exceeds finality activation height
+3. Finality provider has sufficient voting power
+
+Upon passing all checks, the finality provider:
+
+1. Requests a finality signature from the EOTS manager
+2. Submits the vote transaction to the consumer chain
+3. Implements retry logic until either:
+   - Maximum retry attempts are reached
+   - Block becomes finalized
+
+#### Batch submission
+
+A batch submission mechanism is needed to deal with cases where:
+
+- recovery from downtime, and
+- the consumer chain has rapid block production.
+
+Batch sumission puts multiple new blocks into a batch and
+process them in the same loop, after which all the finality votes will be sent
+in the same transaction to the consumer chain.
+
+### Generating Finality Votes
+
+To submit a finality vote, the finality provider needs to fill the
+[MsgAddFinalitySig](https://github.com/babylonlabs-io/babylon/blob/e7ac8fdf888406b16727b9ffca1f2e48364e9f53/x/finality/types/tx.pb.go#L154):
+
+1. Finality provider public key: the BTC PK of the finality provider that casts
+   the vote in [BIP340 format](https://github.com/babylonlabs-io/babylon/blob/79615c6b057de041a9f4c1c4466ef212a0c678d6/types/btc_schnorr_pk.go#L14).
+2. Block height: the height of the block that the vote is signed for.
+3. Public randomness: the public randomness that is retrieved from the local,
+   which is a [32-byte point](https://github.com/babylonlabs-io/babylon/blob/5f8af8ced17d24f3f0c6172293cd37fb3d055807/types/btc_schnorr_pub_rand.go#L12) over `secp256k1`.
+4. Merkle proof: the merkle proof of the public randomness, which is generated
+   when constructing the public randomness commit using the CometBFT's [merkle](https://github.com/cometbft/cometbft/tree/main/crypto/merkle)
+   library.
+5. Block hash: the hash bytes of the block that the vote is signed.
+6. Finality signature: the [EOTS signature](https://github.com/babylonlabs-io/babylon/blob/067082b9d3dd8dbe775d5ada70cd60151fe0f577/types/btc_schnorr_eots.go#L11)
+   that is [signed](https://github.com/babylonlabs-io/babylon/blob/f19de7d0fcc4ea786a070a700a03d2cde3f57b7f/crypto/eots/eots.go#L54)
+   by the finality provider's private key and the corresponding private randomness.
+
+The consumer chain verifies:
+
+- The finality provider has voting power for the given height
+- Randomness was pre-committed and BTC-timestamped
+- EOTS signature validity