It’s a pity that Lightning is so deeply controlled by ideological Bitcoin Maxis instead of open minded technologists who can think outside a box.
Stable coins on a rapidly centralizing Lightning is a very bad idea, there are better, more decentralized systems but they involve another blockchain.
Pity, Lightning is a mess.
What happens when USD value of BTC doubles, and beyond, to the point that collateralization of BTC to USD isn't even at 100%? Seems like wrappers will be able to just walk away with free Bitcoin.
Wrapping and unwrapping will be an organic process. So in effect this will inject a form of dollar cost averaging into the amount held as collateral.
But highly trustworthy wrappers will also develop to the point where the absolute value of the collateral is less important.
I don't follow what you mean about the DCA side. Does the wrapper need to keep 2x HBD at all times or just at time of wrap?
Falling back to just trusting means that a lot of people are going to get rekted by the untrustworthy lot. With enough time, and valued stored, even the trustworthy might faulter.
If I wrap a 0.5 BTC at $40,000 and deposit $40,000 HBD, and a few weeks later the price is $42,000 and I have to deposit another 0.5 BTC, I believe the plan is that I would have to deposit enough to make the collateral up to 84,000 total.
But these numbers will be altered by the reliability of the wrapper. For example my Hive reputation (with all the revenue streams it gives me) ensures that my reputation on Hive is worth many times more than these figures.
Any ongoing premium to wrap will help give out red flags but it'll be too late 90% of the time. Malicious activity will be easily hidden under the guise that the wrapper doesn't have collateral to expand the mint at the moment. Once sufficient bull cycle begins to end it would be highly profitable to rug BTC, sell for stable asset and then recycle to BTC at bottom of market.
Reputation is a tough metric. SBF was reputable in many circles until he wasn't. I'm afraid this will lead to decentralized versions of the same story.
If this is going to give a discount based on Hive reputation that's an even bigger issue since Hive's reputation system is extremely gameable and already very unreliable. Theres many 50 level accounts with better true reputations than 70s that just built rep by being early whales. I'm thinking people like Bernie compared to others that he's destroyed the rep of over time.
