You are viewing a single comment's thread from:
RE: Liquid-Bitcoin's solution for exchanges
Interesting information. I wonder how the pegging part works ;). So it's a different route than lightning as well. Seems like lightning would have also worked? Though perhaps it's more complicated than it needs to be for exchanges to plug in.
No, while I love the LN-it not a fix it all solution. The LN is limited in amount to channel capacity, specifically the capacity of the smallest channel in the ‘hops’ from sender to receiver. With 1000 nodes and only 10 btc- the LN was made for micropayments. Yes in theory with more nodes(doesn't even need to be full :) ) you can send more bitcoins but even then it not good for traders. Liquid was meant for traders untimed amount of bitcoin can be sent. Just peg more bitcoins and boom more bitcoins added to the sidechain. An yes the LN can be added to liquid chain allowing for LN atomic swaps between the LN and liquid network so experiences even fewer delays. Plus traders won't notice the lquid netowrk at all if you read my post :)
I explained the pegging better in my rsk post but I'll copy and paste it here. Too lazy to type it out :)
The 2-Way peg is often said to be a method to transfer BTC into SBTC and vice-versa. In practice, when BTC are exchanged for SBTC, no currency is “transferred” between blockchains. There is no single transaction that does the job. This is because Bitcoin cannot verify the authenticity of balances on another blockchain. When a user intends to convert BTC to SBTC, some BTC are locked in Bitcoin and the same amount of SBTC is unlocked in RSK. When SBTC needs to be converted back into BTC, the SBTC get locked again in RSK and the same amount of BTC are unlocked in the Bitcoin blockchain. A security protocol ensures that the same Bitcoins cannot be unlocked on both blockchains at the same time.
With the use of special opcodes or extensibility to validate SPV proofs in the main chain-the nodes job of pegging is no longer needed until then nodes will continue to peg the bitcoins.
Oh that's not the same as a price peg, haha. Makes sense, thanks.