Name: Adding Liquid-BTC Sidechain to REN Network
Category: Protocol / ren-LBTC Token
Scope: Allow users of Liquid-BTC Sidechain to gain access to REN network
Currently, the REN network supports BTC, ZEC, and BCH chains to be utilized on ETH. This proposal seeks to enable the Liquid-BTC sidechain to this group and thus creating a new token (ren-LBTC) in the process. Holders of Liquid-BTC would be able to transfer directly into ETH DeFi products by going directly from Liquid-BTC -> renLBTC thus skipping the entire conversion to on-chain BTC (and all the associated fees and wasted time).
As of Oct 6, 2020 the relative value of these chains transferred thru the REN network are:
* BTC: $900M * ZEC: $247K * BCH: $224K
This represents an approximate ratio of 0.9995/0.0005 of BTC vs All-Other-Coins. The implication is crystal clear: The value of REN Darknodes is almost exclusively determined by BTC holders using the protocol. To say it another way, without BTC there would be no value to owning a REN darknode. This fact must be recognized, accepted, and used as a basis for further developments. We should follow the money!
Liquid-BTC is a sidechain to the main BTC network with a few important differences: The network is secured by a consortium of financial institutions (Kraken, BitMex, Bitfinex, Ledger, etc). In this way, it is somewhat analogous to REN with our darknode model. The Liquid-BTC is “backed / bonded” by the real BTC entering the network. Likewise, Liquid-BTC is burnt when it moves back on-chain to BTC.
The purpose of the Liquid Network is to serve as a fast, secure, and confidential inter-exchange network. Therefore, instead of traders needing to move funds on-chain from Kraken to Bitfinex - and thereby exposing them to possible 60 min conf times AND broadcasting a public visible trade which could be front-run by competing traders - the Liquid network instead offers guaranteed 1-min conf times and confidential transactions. In short: It is a traders network for large BTC holders.
What better group of people could REN holders hope to have as customers? Large BTC traders who would be interested in quickly getting in/out ETH DeFi products should be our core audience.
An important side-note to this, the Liquid network supports “Assets” (ie. Tokens) as well. In fact, Tether Liquid-USDT is available on the Liquid network. Currently, there are a few hundred tokens on Liquid Network – most are just proof of concepts – but over time this number will obviously grow. Because of the existence of Tokens on Liquid, there are current projects to create “DEXes” on Liquid. Two examples see: https://liquiditi.io/ and https://github.com/RCasatta/LiquiDEX
The point on the above is that Liquid could well develop into “the native DeFi / DEX network for Bitcoin”, thus it is important for REN to act as a bridge as there will undoubtedly be flow from BTC <-> Liquid <-> ETH
The Liquid Network uses Elements as its node (https://elementsproject.org/). Like BCH & ZEC, the Elements Node is in fact just a fork of Bitcoin-core node, therefore implementation should be straight-forward for REN developers.