60 lines
4.2 KiB
Markdown
60 lines
4.2 KiB
Markdown
# DeepDive into Liquid: Part III - Advanced Asset Functions, Peg-Out, Discussion
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This is a multipart DeepDive that will focus on the Liquid Sidechain. It will be released in 3 Parts:
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* [Part I](https://stacker.news/items/399400): Overview, Installation, and first Peg-In
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* [Part II](https://stacker.news/items/407806): Asset Creation and Configuration
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* Part III (this): Advanced Topics and Peg-out
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# Advanced Asset Topics
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[In Part II](https://stacker.news/items/407806), we focused on issuing Assets. Now let's look at the ways you can *use* assets.
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One of the most basic usecases for a custom issued asset is to exchange it for something else. For purposes of discussion, let's assume that a company - say StackerNews Airline - wants to issue their clients "Air Miles" for each flight they take. The idea is clients will accrue these *points* and then be able to exchange them for either discounts off future flights or direct cash (ie. USD / BTC).
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If we start thinking like a developer for second, all of this implies lots of little things to be built: We would need an accounting system to manage the points, we would need some way to issue these points to the clients, who themselves would need some a way to store and manage their points. Further, there would need to some type of middleware to handle the exchanging of points for cash. Also there is a big question of security...could development staff - either intentionally or unintentionally - wind up giving away millions in points? Sure, Stacker News could just do all this themselves using SQL, but lets suppose that since they were clever boys & girls, so they wanted to do as little of the hard work as possible.
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Liquid would make a great solution for this case. They could simple direct their users to download one of the existing Liquid wallets[^1] and use the Liquid sidechain as the "accounting system" for their asset.
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## Atomic Swaps
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So our client has 1 `StackerNewsDemo-1` token in their wallet (which for our purposes is our pretend airline mile token) and he wants to exchange that for L-BTC. How do we do that?
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Obviously, we could build some type of webservice that had SQL databases and nodejs files that accept Asset A and then issued Asset B once received...however as we said our StackerNews crew is smart and therefore prefers to do *less hardwork*
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Luckily, due to the additional OPCODEs in Liquid, it supports atomic swaps between assets. In fact, Blockstream has a tool to simplify using it (obviously the steps we do here manually with the tool would be automated within the server / client in production).
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## Securities / Transfer Restricted / etc
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# Pegging Out
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# Discussion
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## Lightning Integration
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## Using Liquid with BTC / LN
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### Comparing eCash / Lightning / Liquid / BTC
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|| eCash | Lightning | Liquid | BTC |
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|-| ------| -------- | -------- | ---- |
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|UTXO Model:| No UTXO. Bearer token | Your UTXO is in a multisig. | You own UTXO in sidechain | You own UTXO in mainchain |
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|Redemption:| Depends on mint | No dependency (might require fee) | Depends on Federation | No dependecy |
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|Longevity: | Mint must survive | Channels will close at somepoint | Federation must survive | UTXO forever |
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|Online:| Must be online to verify eCash token | You must be online to recieve. You must stay online (or hire watchtower) to secure channel state | Offline receive | Offline receive |
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|TXN Time:| Instant transactions | Instant transactions | Fixed 2 min transactions | Variable ~10 min transactions |
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|Fees:| No fees | Neglible fees (msat) | "Low" fees (~200 sats) | High fees (~15,000 sats)|
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|Liquidity:| No liquidity management | Must manage liquidity (in/out) | No liquidity management | No liquidity management|
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|Privacy:| Mints can aggregate and assemble transaction data | Nodes could aggregate and assemble transaction data | Confidential transactions | Absolute public ledger |
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|Federation: | Must vet each Mint | You choose channel partner | Known federation members | Soverign |
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| Frac Reserve Possible: | Yes | No | Verifiable Issues | No |
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|Likely Threat:| Debasement or Mint rug | Theft of funds while offline | Federation censorship | Losing keys / unspendable UTXO for fees
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|Maturity: | 2023-2024 | 2018 | 2018 | 2009
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## Building Your Own Federation
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