Atomic Loans launches loans on Ethereum with BTC collateral through atomic swaps
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| Atomic Loans launches loans on Ethereum with BTC collateral through atomic swaps |
Atomic Loans Launches Beta DeFi Product Using Bitcoin To Provide A Loan On Ethereum Blockchain Using Atomic Swaps.
Atomic Loans works almost the same way as MakerDAO or Compound. The borrower must block the security in BTC in a special contract with multi-signatures in the Bitcoin blockchain. Smart contracts on Ethereum can then verify this data and provide a stablecoin loan on another blockchain.
Atomic Loans co-founder and technical director Matthew Black noted that the system does not release its own stablecoins, which makes it more like Compound than MakerDAO.
Like other DeFi platforms, Atomic Loans has a minimum collateral requirement below which the lender can initiate liquidation. For BTC, it was set at 140% - 10% lower than what Maker requires for Ethereum, but 7% more than the same percentage on Compound.
Black said that the decision to establish a level of security was made based on the desire to create something in between, based on competitors' indicators. The platform team considered Bitcoin "a much more stable asset."
The other day, the company announced the receipt of financing in the amount of $ 2.45 million from Initialized Capital and with the participation of ConsenSys, Morgan Creek Digital and other large investors.
Need for trust
Black notes that, as in the case of many other gateway solutions on Bitcoin, an element of trust is needed in the platform.
“There are two main points of trust in the system. One of them is oracles, and the other is an arbiter on the side of Bitcoin. [...] Essentially, the arbitrators sign a contract with the creditor in order to transfer bitcoin from its current location to an atomic swap contract. ”
Trusted oracles are found on most DeFi platforms on Ethereum. The need for an arbiter is specific to Bitcoin due to the limited functionality of the contracts. Atomic Loans is the arbiter, although the company in the second version (V2) plans to remove the arbiter from the equation and use hidden discreet log contracts instead.
First introduced by the MIT Digital Currency Initiative, these contracts allow the use of oracles in deciding how to conduct a transaction. In fact, when concluding a contract, users create all possible combinations of transactions based on the expected output of the oracle.
The oracle acts as a third party to the multi-signature contract, and when it finally transfers the correct public key for the particular combination, the transaction is initiated. In the case of Atomic Loans, they can be used in a liquidation scenario to split the funds between the liquidator and the borrower.
According to Black, V2 will be deployed within six months, although this will depend on feedback on the first version of the product.
The lack of complex smart contract scenarios is one of the problems for any DeFi product to work on Bitcoin. Even transferring BTC as an asset to another chain usually requires a reliable “federated” bridge where companies store BTC.
“Several solutions are already being developed for Bitcoin and ERC-20, which will soon appear in Ethereum,” Black writes. “One of them is Wrapped BTC (wBTC), which already runs on several platforms, such as Compound.”
DeFi continues to actively develop and influence other areas of the cryptocurrency industry. DappReview recently reported that DeFi has become a growth driver for the entire class of decentralized applications.
Atomic Loans works almost the same way as MakerDAO or Compound. The borrower must block the security in BTC in a special contract with multi-signatures in the Bitcoin blockchain. Smart contracts on Ethereum can then verify this data and provide a stablecoin loan on another blockchain.
Atomic Loans co-founder and technical director Matthew Black noted that the system does not release its own stablecoins, which makes it more like Compound than MakerDAO.
Like other DeFi platforms, Atomic Loans has a minimum collateral requirement below which the lender can initiate liquidation. For BTC, it was set at 140% - 10% lower than what Maker requires for Ethereum, but 7% more than the same percentage on Compound.
Black said that the decision to establish a level of security was made based on the desire to create something in between, based on competitors' indicators. The platform team considered Bitcoin "a much more stable asset."
The other day, the company announced the receipt of financing in the amount of $ 2.45 million from Initialized Capital and with the participation of ConsenSys, Morgan Creek Digital and other large investors.
Need for trust
Black notes that, as in the case of many other gateway solutions on Bitcoin, an element of trust is needed in the platform.
“There are two main points of trust in the system. One of them is oracles, and the other is an arbiter on the side of Bitcoin. [...] Essentially, the arbitrators sign a contract with the creditor in order to transfer bitcoin from its current location to an atomic swap contract. ”
Trusted oracles are found on most DeFi platforms on Ethereum. The need for an arbiter is specific to Bitcoin due to the limited functionality of the contracts. Atomic Loans is the arbiter, although the company in the second version (V2) plans to remove the arbiter from the equation and use hidden discreet log contracts instead.
First introduced by the MIT Digital Currency Initiative, these contracts allow the use of oracles in deciding how to conduct a transaction. In fact, when concluding a contract, users create all possible combinations of transactions based on the expected output of the oracle.
The oracle acts as a third party to the multi-signature contract, and when it finally transfers the correct public key for the particular combination, the transaction is initiated. In the case of Atomic Loans, they can be used in a liquidation scenario to split the funds between the liquidator and the borrower.
According to Black, V2 will be deployed within six months, although this will depend on feedback on the first version of the product.
The lack of complex smart contract scenarios is one of the problems for any DeFi product to work on Bitcoin. Even transferring BTC as an asset to another chain usually requires a reliable “federated” bridge where companies store BTC.
“Several solutions are already being developed for Bitcoin and ERC-20, which will soon appear in Ethereum,” Black writes. “One of them is Wrapped BTC (wBTC), which already runs on several platforms, such as Compound.”
DeFi continues to actively develop and influence other areas of the cryptocurrency industry. DappReview recently reported that DeFi has become a growth driver for the entire class of decentralized applications.