Replying to Avatar Mindaugas

Great Rabbit Hole Recap. nostr:npub1qny3tkh0acurzla8x3zy4nhrjz5zd8l9sy9jys09umwng00manysew95gx one thing I am really curious about - while USDT on LN may not be ideal for everyday payments, wouldn’t it be a huge breakthrough for Bitcoin-backed loans?

If Tether on LN + DLCs can be combined, could we finally see Bitcoin-backed lending without trusted third parties? It seems like the biggest missing piece to making such lending both trustless and more accessible.
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ODELL 10mo ago 💬 1

MAYBE A USE CASE THERE BUT WOULD STILL HAVE MULTIPLE TRUSTED THIRD PARTIES INVOLVED.

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Mindaugas 10mo ago

I think the issue you refer to is still enforcing repayment/liquidation without a trusted oracle, right?

BTC can be locked and USDT issued, but we would need an oracle (or something) to confirm repayment and release BTC trustlessly.

I need to explore this more myself, but maybe federated DLC oracles could help? I do not like overcomplicated solutions - they usually do not get used - but worth looking into, I guess.