⚡ StackSats Saturdays | 2021 Week#11

🔐 Bitcoin multisig 💲 Open source funding ↪ Pegged BTC

🤔 Are there cryptocurrencies that are pegged to Bitcoin?

First, one might ask why pegged a crypto to BTC? There are a few reasons, e.g CEXes can discriminately choose which tokens to list. Users who wish to keep funds on a CEX may find themselves needing to transfer one type of pegged value asset into another in order to do so. Another reason is user demand for composability between protocols.

BTC++ (PieDAO BTC++) - BTC++ is ERC20 token composed of 25% WBTC, 25% sBTC, 25% pBTC, and 25% imBTC. PieDAO is an asset allocation decentralized autonomous organization (DAO) for governing tokenized portfolio allocations. These are called “PIEs” which are non-custodial Balancer smartpools available to anyone in the world with an internet connection.

HBTC (Huobi BTC) - Every 1 HBTC issued is backed by the same BTC asset quantity to ensure users can perform a 1:1 exchange between HBTC and BTC at any time.

imBTC (The Tokenized Bitcoin) - An ERC777 token backed 1:1 with Bitcoin, issued and regulated by Tokenlon. imBTC holders receive a portion of Tokenlon’s imBTC trading fees.

L-BTC (Liquid Bitcoin) - A special type of asset on the Liquid sidechain, with a supply that is verifiably backed 1-to-1 with bitcoins (BTC) held by the Liquid Federation on the Bitcoin mainchain. L-BTC is designed to make the activities of traders and exchanges more efficient than transacting on the Bitcoin mainchain by providing faster settlements and strong confidentiality. Besides being transacted as an asset on the Liquid Network, L-BTC is also used to pay transaction fees for the transfer of any assets on the network.

oBTC (BoringDAO BTC) - An ERC20 token backed by BTC created by BoringDAO. BoringDAO is a decentralized bridge that allows users to transfer assets across blockchains. For each blockchain asset, there will be an exclusive minting tunnel operated in the form of DAO and performing bi-directional mapping between blockchain assets and ERC20 oTokens. Mint Mining is the mechanism which users can wrap their non-ERC20 assets into oToken, e.g. Bitcoin to oBTC, and receive BOR token rewards.

pBTC (pNetwork BTC) - pNetwork is the underlying architecture for pTokens, a cross-chain system enabling assets to move frictionlessly from one blockchain to another.

RBTC (SmartBitcoins) - Now you can send BTC (“or peg-in”) to a multisig address in the Bitcoin blockchain managed by RSK PowPeg. Those BTC get locked, and a proof of that transfer (SPV proof) is fed to a special smart contract on the RSK blockchain called the Bridge contract. To redeem RBTC for BTC (or “peg-out”) first you have to send the RBTC to a special address of the Bridge on the RSK Blockchain but since Bitcoin cannot verify transactions on a secondary blockchain because its scripting capabilities are limited on purpose to reduce its surface of attack, we need the RSK Powpeg to assist in the signing of the release transaction on the Bitcoin side. The peg-in process takes around 15 hours (100 Bitcoin blocks) to avoid losing funds due to a reorganization of either blockchain. The peg-out process has an even longer delay of 4000 RSK blocks (about 33 hours) for maximum security.

renBTC - RenVM is a byzantine fault-tolerant protocol that facialites ECDSA threshold key generation and signing via sMPC. This facialites interoperability for decentralized finance (DeFi), by allowing anyone to seamlessly bridge digital assets to and from the DeFi ecosystems. The easiest way to imagine RenVM is that of a network that holds your digital assets, as they move between blockchains. Let’s use BTC as an example; you give BTC to RenVM, it holds that BTC, and it mints that BTC as an ERC20 (renBTC) on Ethereum with 1:1 ratio, ensuring your renBTC is always backed by the same amount of BTC. This process applies to all digital assets RenVM supports.

sBTC - Synthetix is a decentralized platform on Ethereum for the creation of Synths: on-chain synthetic assets that track the value of real-world assets. Born as stablecoin project Havven, Synthetix rebranded and expanded its scope prior to launching on mainnet. The platform supports over Synths representing fiat currencies, commodities (e.g., gold), and cryptoassets. Stocks, indices, and other derivatives are planned.

tBTC - tBTC is designed to be a safe and permissionless bridge between BTC and ETH. An open-source project of Keep, Summa and the Cross-Chain Group, tBTC lets people exchange BTC for TBTC, an ERC-20 token. tBTC is trustless, using a random beacon to select “signers” who have responsibility for the deposited BTC. People can convert TBTC to BTC, and vice-versa, with no intermediary needed to sign off. The project uses threshold ECDSA, which is audited and in use on wallets and exchanges. There are protections of funds via Nexus Mutual

WBTC (Wrapped Bitcoin) - BitGo handles the initial custody, and Kyber and Ren dipped into their Bitcoin holdings to supply the initial liquidity. To swap BTC for WBTC, a user must undergo KYC/AML with a merchant, who supplies the user’s BTC to the custodian, who mints an equal amount of WBTC. The reverse is also possible: merchants can redeem BTC by burning WBTC tokens. Users can verify that WBTC is fully-backed via on-chain proof of reserves.

🤔 What is a Multisignature Bitcoin Address?

Bitcoin has a scripting language which enables more than a “send money from X to Y” transaction.

A Bitcoin transaction can require M of N parties to approve a transaction. The escrow in each case can be locked so that the arbiters can’t take the money themselves – only approve or deny the transaction.

  • Wills that automatically unlock when most of the heirs agree that their parent has passed, no lawyer required

  • Business accounts that require two of any three trusted signatures to approve an expenditure

  • Wire escrows that go through when any arbiter agrees that the supplier sent the goods to the buyer

  • Wallets that are socially secured by your friends and family

  • Allowance account accessible by the child and either of two parents

  • Crowdfunding of a Kickstarter project that pays out on milestones, based on the majority of the backers approving the next payment.

  • Smart property – for example, a car’s electronic key so that when and only when a payment is made by the car buyer to the seller, the seller’s car key stops working and the buyer’s car key (or mobile phone) starts the car. Imagine your self-driving car negotiating traffic, paying fractional bitcoin to neighboring cars in exchange for priority.

🤔 What are viable funding sources for an open source project?

There is a “tragedy of the commons” in open source technology.

When individual users, who have open access to a resource unhampered by shared social structures or formal rules that govern access and use, act independently according to their own self-interest and, contrary to the common good of all users, it cause depletion of the resource through their uncoordinated action.

Shared resources must be treated like an organism that needs to be fed and well-tended in order to encourage its growth and evolution for the common good.

Here are some ideas and platforms that fund open source projects for sustainability.

1. Gitcoin

2. OSCoin

3. Moloch DAO

4. CodeFund - Open Collective

5. Block Rewards Funding (EIP1789)

👀 Highlights of the week:

  • Bitcoin (BTC) has Gained Over 1200% A Year Since the Covid Crash of March 12,2020. (CoinGape)

  • Bitcoin's detractors haven't done their research. (TFTC)

  • The 5 Most Important Charts Tracking Bitcoin Adoption. (Coinmonks)

  • Bitcoin and Uncle Sam: It's Complicated. (Decrypt)

  • The Bitcoin boom: The future of the company balance sheet. (Cointelegraph)

  • Running Bitcoin & Lightning Nodes Over The Tor Network (2021 Edition). (StopAndDecrypt)

  • Serious Question: What happens if countries really BAN bitcoin? (r/Bitcoin)

  • The U.S. government will auction off a small amount of bitcoin next week (The Block)

  • The risks and rewards of lending Bitcoin. (Dan Held)

  • China Turns Bullish on Bitcoin. (Trustnodes)

PS - Joined our community on Quora yet? A bunch of Bitcoin ₿elievers sharing, learning and looking out for each other.

Not financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Do your own research.