Create BSIP9999 Distributed Bitcoin Cross Claim Gateway #287
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| Witnesses upload bitcoin headers | ||
| Anyone can issue "polkaBTC" to anyone by locking BTC on Bitcoin Mainnet |
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Technically, how to achieve "locking BTC on Bitcoin Mainnet"?
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locking - in this sense - means Alice (vault client) has given Bob (vault operator) full possession of her BTC.
Bob is now contractually obliged to maintain (BTS) collateral on the issuing chain of vaultBTC.
As a precondition... Bob had set aside an amount of collateral that "could be locked" by a vault client.
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further reading:
https://interlay.gitlab.io/polkabtc-spec/spec/issue.html#requestissue
https://interlay.gitlab.io/polkabtc-spec/spec/issue.html#executeissue
I'm working on a full Alice/Bob thought experiment write up of the issue/redeem functionality.
I've probably made some misstatements, as my time is currently limited; hence "Draft".
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My reading is Bob can only issue vaultBTC by locking up enough BTS so it's sort of like creating bitBTC and then selling it for BTC.
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Bob is now contractually obliged to maintain (BTS) collateral
This hasn't worked out well for bitAssets in (BTS-)bear marekts in the past. Why would it work better for collateralizing off-chain assets? If you want to make it "secure" you need a high collateral ratio which makes this thing super capital in-efficient. The more volatile your collateral is, the worse this becomes.
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in theory - you could back a "polkaBTC" vault construct with honest.btc as easily as you could with core token.
now bob wants to be a vault operator; he buys honest.btc on the open market - he's not a borrower at all
now he puts up his - owned - honest.btc as collateral 1:1 and that rate stays pegged so long as honest.btc retains 1:1 value with real btc; his loan would never require any maintenance. the oracle of the peg could simply be the dex market price of honest.btc:bts vs the feed price of honest.btc:bts
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My reading is Bob can only issue vaultBTC by locking up enough BTS so it's sort of like creating bitBTC and then selling it for BTC.
except that there is no way to sell bitBTC for BTC without an htlc arrangement or cex
here with polkaBTC bob has real BTC in hand after the tx and all accounting has been handled by the issuing chain (Bitshares) with awareness of bitcoin headers via a network of spv witness oracles.
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Some illustrations?... If that is : 1.Witness multi-signature the smart contract/wallet on Bitcoin Mainnet; HTLC? |
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This is similar to bitBTC but maybe (/hopefully) with some HTLC or similar functionality that means BTC has to be committed in order for polkaBTC to be created (i.e. a cross chain trade and the new asset is only released / created if the two requirements - BTC sent, collateral locked up, are met) if not it is exactly the same as bitBTC pretty much? It's better to have some buy in from BTC in creation of the asset. A far superior option is locking up BTC but has anyone got close to figuring out a road map for how that could be done? I need to read up on how all the wrapped ETH contracts do it. |
with the mpa construct bob wishes to get bitBTC and he locks core token collateral; he "self issues" bitBTC to himself. This is not real BTC... its just an mpa on the dex; so bob cannot take this BTC and put it in cold storage BTC wallet or send it to a cex and do a traditional cex swap to another chain unless the cex will do business in bitBTC. with the polka construct bob wishes to get real BTC. So he sets aside some collateral and fishes for a client by advertising a fee to do a swap. alice approaches him and says I'll give you real BTC so long as you give me polkaBTC. alice transfers real BTC to bob alice can get her real BTC back via a redeem operation with bob - or charlie |
A fact is the redeem operation with real BTC has to be done on the Bitcoin blockchain. If nobody responses to her request she simply can't get any real BTC. Since she owns pBTC only on the p chain, the only thing she can do with her pBTC is to settle it for the core token of the p chain -- that's essentially what bitBTC is.
If no HTLC is involved in the process Bob is able to run away when he got Alice's real BTC. Or vise versa. |
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