Subnostr

VOLKER - Voice Of Logic Knowledge Experience & Responsibility

What is the "peg-out problem"?

It is the process of „burning“ L-BTC held by on Liquid sidechain to release the equal amount of mainchain BTC. Currently this can be only be done by a Liquid federation member, which implies some trust in the federation.

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Discussion

2Pac 2y ago

You can do a swap instead of pegging out

Maxim 2y ago

True. For you as a single use the problem is not that big: there are good swap services. But globally the problem remains unsolved.

2Pac 2y ago

It will never have the same trustless of layer 1, it’s the trade off for lower fees and privacy.

Maxim 2y ago

It won’t. But it can be improved either by reforming the federation or by allowing Liquid nodes to peg out (same way you can force close a LN channel on your node).

VOLKER - Voice Of Logic Knowledge Experience & Responsibility 2y ago

I see. So it's not a technical problem, more of a design tradeoff that's not to your liking.

Maxim 2y ago

Correct. More of a conceptual & design problem that can be resolved in practice, while the whole Liquid thing will certainly always be a trade-off.