BTC Peg Zones?

[zmanian]

Should a BTC Pegzones be a priority for ATOM 2021?

Layout the Pros and Cons

[zmanian]

TSS implementations
https://gitlab.com/thorchain/tss

https://github.com/binance-chain/tss-lib

[Hyung-bharvest]

Why BTC Pegzones should be one of the center of ATOM 2021 vision

Ethereum Case Study

1. recent fast expansion of BTC peg usecase in ethereum space

• WBTC locked assets have grown from $10M to $200M in less than 4 months

2. WBTC usecases on different Defi solutions

• widely used in many Defi solutions for trading and being collateral

3. WBTC have centralized operation structure

• the centralized operation status gives us a good opportunity to provide more decentralized option for BTC holders to peg-in their assets to our ecosystem

Current projects under construction

https://gitlab.com/thorchain/tss
https://github.com/binance-chain/tss-lib(binance)
https://github.com/summa-tx/relays
https://github.com/interlay/BTC-Parachain(polkadot)

Why important for us

1. Asset pegging is one of the biggest pillar of Ethereum Defi space
2. It is relatively much more important for our Cosmos ecosystem than Ethereum because

• Ethereum already has bunch of assets in native ERC20 format
• therefore, Ethereum already has rich ecosystem for Defi usecases
• but, the internal Cosmos ecosystem is very tiny compared to Ethereum
• to gain growth, connection to different blockchains is much more crucial for Cosmos Hub to attract more users

Why now?

1. Necessary ecosystems for successful BTC peg

• stable operation of pegzone without significant failure risk
• great intuitive interface with convenience which provides one-stop pegging experience
• other Defi products which give users enough attraction to be participated in
• production ready shared security to enhance the BTC pegzone security

2. It is not like launching and booming at the same time

• it needs many ecosystem environment to grow
• it needs enough time to test and wait for the outside users to be recognized and attracted
• if it is enoughly pushed as now, even after completion of PoC for backend, the real production level solution will take at least more than a year
• WBTC launched January 2019, and it now shines after 1.5 years -> we expect very long time before it actually attracts users

3. To discuss about shared security support from the hub, and financial support from community fund

• we have limited resources in the hub to provide shared security
• so we need to discuss seriously about which pegzone should be provided with shared security
• it is important that we have multiple good teams building BTC pegzone in our ecosystem and the teams should possess good willingness to care about the Hub's growth and sustainability of longer term of operation responsibility
• we can discuss right now about any necessary funding into good candidates to support the building teams

[ebuchman]

I think BTC pegzones should be a critical part of the ATOM2021 story.

Note there's also the Nomic BTC peg: https://github.com/nomic-io/nomic. Their plan is to have it merge mined with Bitcoin, which poses an interesting approach to getting a secure validator set. This could conceivably launch and connect via normal IBC to the hub before shared-security approach is viable. And with an AMM on the Hub we could then then have ATOM/wBTC swaps there. Will need to study the security around this more.

In general I'm very interested in using BTC on Cosmos peg zones as a bancor style reserve currency.

[Hyung-bharvest]

When we consider practical side of operation, we should progress from interesting solution to working service.

The necessary condition is enough security level provided by the service. Can we achieve that without shared security at the moment? How can we do that? Will users be OK with less security? How can we get the less security? Who will take the responsibility of operation? How can we fund them?

Let's go forward and answer these questions.

What I want to brainstorm is that can we just deploy cosmos btc supply control on hub gaia module and btc wallet controlled by validators?

[faddat]

I'm pretty sure that Bitcoin won the money contest. My guess is at this point it's just a matter of time.

So what does that mean for the top 2000 alternative sovereign blockchains? Well in my opinion, one of the things that this implies is that there will be a vast amount of demand for Bitcoin in a fast-moving form, with full and fast finality.

since I am (maybe prematurely) viewing Bitcoin as a reserve asset, or as base layer hard money/capital, It's my feelings that the most competitive blockchains are going to support Bitcoin extremely well because that is going to drive unquestionable value into their ecosystems.

Over the next two years my guess is that alt chains will be differentiated from one another by how well or poorly they support Bitcoin.

So I've got to vote a strong yes on this issue.