Threshold is a network that provides a suite of cryptographic primitives for various decentralized applications (dApps). It is the result of a protocol merger between the Keep Network and NuCypher, which was finalized on January 1, 2022, with the launch of the T token. The T token serves dual purposes: it is a utility token for the Threshold Network and a governance token for the Threshold DAO. The T token is primarily used to stake a node, with node operators being compensated with fees from applications that rely on the Threshold network’s cryptographic primitives. Additionally, the T token is a governance token, and users can lock the token in coverage pools to receive potential compensation in exchange for underwriting collateral risk in the network.

Threshold operates by providing a suite of cryptographic building blocks for privacy, access controls, and cross-chain bridges. These include Proxy re-encryption (PRE), Threshold signatures (TSS), Distributed key generation (DKG), and Random beacon (RB). The T token is used to stake a node in the network, and node operators are compensated with fees from various applications that rely on the Threshold network’s cryptographic primitives. The T token also serves as a governance token, allowing users to participate in the decision-making process of the Threshold DAO.

Threshold provides a range of potential use cases, primarily through its suite of cryptographic primitives. These include privacy, access controls, and cross-chain bridges. One of the flagship applications of Threshold is tBTC, a tokenized Bitcoin that is completely permissionless, aiming to allow anyone to tokenize their Bitcoin and potentially use it in DeFi applications without sacrificing privacy or risking censorship. The T token is also used for staking nodes and participating in the governance of the Threshold DAO, serving as a component of the network's operation and governance.

Threshold is the product of a protocol merger between the Keep Network and NuCypher, which was first proposed by the community in February 2021. The final proposal, which defined the terms of the merger, was approved in June 2021 by both communities. The merger was finalized on January 1, 2022, with the launch of the T token. The initial supply of T was 10 billion, with 4.5 billion allocated to NU holders, 4.5 billion allocated to KEEP holders, and 1 billion allocated to Threshold DAO. The vending machine contracts, with static conversion ratios, aim to be available to NU and KEEP holders indefinitely, potentially allowing them to upgrade their tokens to T at their convenience.

Threshold's tBTC functions by using a network of independent nodes, known as "Beta Stakers", to safeguard the wallets that hold the Bitcoin backing tBTC. These nodes are highly reliable and stake a substantial amount of Threshold's native token, T. When a user intends to mint tBTC, they transfer their Bitcoin into a secure, trustless transfer on the Bitcoin blockchain. This process involves a group of randomly selected, bonded signers who hold the collateral in a decentralized and trustless manner. The bonded signers generate a Threshold Signature for the transfer, allowing users to mint an equivalent amount of tBTC on Ethereum. When users wish to redeem their Bitcoin, the process is reversed, with tBTC tokens burned and the original Bitcoin released to the user. This approach aims to reduce single points of failure, with the intention that no single entity can control or compromise the system.

The Threshold Network's bridge protocol, known as tBTC, is characterized by its approach to bridging Bitcoin to Ethereum. It uses threshold cryptography to enable Bitcoin holders to maintain sovereignty and control over their Bitcoin while accessing Ethereum's ecosystem. This is achieved in a decentralized and trustless manner, meaning users don't have to rely on a central authority. The tBTC protocol is a solution that allows Bitcoin holders to bridge their assets onto Ethereum and access a variety of applications, thereby enabling them to utilize their assets and potentially receive non-monetary rewards. The Threshold Network seeks to address the scalability constraints of the previous version of tBTC. It intends to make tBTC v2 accessible to a wider user base. This approach of privacy, control, and scalability is a characteristic of the Threshold Network's bridge protocol in the cryptocurrency space.

Users can participate in transaction validation on a proof-of-stake (PoS) blockchain with Threshold. Threshold operates on several blockchains including Ethereum, Solana, Polygon, Polkadot, and Kusama. It allows users to transfer their crypto assets, such as Ethereum, and receive non-monetary incentives without the need to set up and maintain complex infrastructure. One of the key characteristics of Threshold is that it provides a mechanism for liquid staking. This means that when users transfer their Ethereum (or other supported cryptocurrencies), they receive staked tokens in return (e.g., stETH for Ethereum). These tokens represent the user’s transferred assets plus accumulated non-monetary incentives. The feature here is that these tokens remain liquid and can be used in various DeFi applications while still accruing non-monetary incentives. Threshold provides a mechanism for staking. Users can connect their wallet, choose their transfer amount, and confirm the transaction in their wallet. They will then receive staked tokens, representing their transferred assets and daily non-monetary incentives. These tokens are dynamically updated to reflect the non-monetary incentives. Threshold allows users to unstake their assets at any time.

Threshold employs a range of audit and security measures to maintain the safety and integrity of its operations. These measures are designed to provide reasonable assurance that any significant misstatement that could impact the usability of financial statements is detected. The materiality threshold in audits is a benchmark used to conserve resources while still achieving the objective of the audit. It's important to note that materiality can have various definitions under different accounting standards, such as the Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS). Alongside these financial audits, Threshold undergoes IT security audits. These audits assess the organization's information systems against a checklist of industry practices and externally established standards. The audit process involves testing whether Threshold's information systems are adhering to a set of internal or external criteria regulating data security, network security, and infrastructure security. Threshold has undergone an audit of its Solana Smart Contracts by Least Authority. This audit evaluated various aspects of the code, from its accuracy to potential vulnerabilities, along with the system design. The audit noted attention to security and the system design and code execution.

T token holders have the right to be involved in the decision-making process of the blockchain project or protocol they are associated with. This involvement is facilitated through governance tokens, which are types of cryptocurrencies that grant holders voting rights in the project's governance. The influence of a token holder's vote typically depends on the quantity of tokens they hold. These governance rights can encompass voting on proposals for alterations to the software code, protocol enhancements, bug resolutions, feature additions, and more. Governance tokens are intended to foster a more decentralized system that may enhance trust among participants. They provide a motivation for individuals to engage in the network and contribute towards its development, which could lead to increased use of the protocol. However, the specific rights and methodologies can differ from one project to another.