Name : Continuous Fee Bond
Category : Protocol
Status : Draft
Overview : In order to retain a pure 1:1 BTC to renBTC wrapping solution, perhaps a way we can solve this is by requiring through the smart contract a bond, to be placed in escrow, could be in ETH, could be in renBTC upfront, that would be subject to the continuous fee in the event TVL is approaching a critical state.
As some are more concerned than others about maintaining a true 1:1, a workaround solution might be to just require a refundable bond, upfront when wrapping, this bond would be subject to continuous fees, until depleted. Sizing the bond would become a question for another RFC if this concept is embraced as a solution.
Customers understand upfront that to leave wrapped assets in RenVM is not a free process, that there is a clear price that might be forgone in the name of security, while able to maintain 1:1. Whenever they decide to BURN back.
Having some leverage to incentivize the necessary market behavior is a pro if the bond was larger enough to motivate and was clear to customers that it was being drained. Bond would be returned in full, assuming that there are no continuous fees in play.
Additional cost burdens that are not being used by competition give us a disadvantage as a network.
Bonds might increase TVL further unless held in a separate contract of some kind.
The bond pool might be difficult for people who have acquired their renBTC by other means such as in DEX or trading, instead of by bridging, in theory, someone put up a Bond, and that might be tied directly to that amount, but for pass-through purposes, this might be an issue.
I don’t see a problem with not maintaining a 1:1, but this has been voiced frequently in the forums, and perhaps it’s time to discuss it since, TVL has not been in check for multiple Epochs at this point.
Adding to the complexity of the RenBridge and Smart Contract required when the initial wrapping takes place to escrow the bond and return the bond when BURNing.