Dialogue DeCus: How to realize a cross-chain custody system with high capital efficiency?

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What if you are a Bitcoin holder and want to participate in various other public chain DeFi projects?

Original title: “Dialogue 8848: Decentralized Custody Plan Supernova, DeCus Brings High Capital Efficiency Cross-chain Custody System”
Interviewees: Iris Sun and Jeffrey Yu, DeCus core members. Compilation: 8848 community

On April 22, 2021, DeCus and the 8848 community held an AMA event. This AMA invited IRIS SUN and JEFFREY YU, core members of the DeCus team, who introduced DeCus’ working principles, competitive advantages, development progress, and recent The following is the text of this AMA, welcome to read!

Question 1:

From your perspective, can you briefly introduce the DeCus project to our community partners? How will it bring users a better BTC Yielding experience?

answer:

Hello everyone, I am very happy to be a guest in the 8848 community.

What if you are a Bitcoin holder and want to participate in various other public chain DeFi projects?

The current choice is to exchange native bitcoins with tokenized bitcoins such as WBTC, renBTC or tBTC, but in fact, these schemes have hidden dangers in asset security or inefficient use of funds.

As a decentralized asset cross-chain protocol, DeCus hopes to introduce the value of Bitcoin into various types of decentralized finance in a way that will never decouple, is absolutely safe, efficient, and allows Bitcoin holders to achieve higher returns. platform.

DeCus’s first product is a new generation of Bitcoin anchored coin-eBTC with a decentralized issuance and a mortgage rate of only 20%.

An indisputable fact is that Bitcoin will be the digital asset with the largest market value and the best liquidity for a long time, but it is not compatible with smart contracts, so its asset market value cannot be transformed into the bottom layer of various applications.

DeCus’s vision is to effectively financialize Bitcoin and other high-value, high-liquidity and high-recognition assets, so as to reduce the cost of psychological migration of users while increasing the income of holding such assets.

Question 2:

The DeCus team has a very luxurious background. Can you introduce the background and story of your team?

answer:

I’m overwhelmed. I think it’s more accurate to say that the DeCus team has two main advantages: one is that our technical team is very well configured, the core members are all Ph.Ds with Tsinghua Yaoban background, and the core algorithm model has also been patented. , This provides a very solid guarantee for our original system development and subsequent safe and stable operation.

The second is that team members trust each other and share the same values. The two founders of the team are both from Bitcoin quantification. In the process of communicating with many Bitcoin miners and people with Bitcoin asset management needs, they found that they also very much hope to use Bitcoin to participate in the current DeFi ecosystem. Let Bitcoin become an interest-bearing asset in a more effective way, but none of the existing solutions can meet their requirements. So the two founders thought about whether they could use the model just mentioned to develop a system that is more friendly to bitcoin holders and more efficient in capital utilization, and bridges bitcoin to the existing DeFi ecosystem.

The team members all believe that the long-term prosperity of the DeFi ecosystem is inseparable from more original development and infrastructure construction, and we will work hard together.

Question 3:

At present, there are many attempts to bring BTC into the DeFi world, such as Badger Flathead and HBTC and WBTC launched by centralized institutions. Compared with these projects, what are the innovations of DeCus and eBTC?

answer:

Let’s first put a picture to let everyone feel the position of eBTC.

Dialogue DeCus: How to realize a cross-chain custody system with high capital efficiency?

At present, the Bitcoin anchor currency on Ethereum has two main defects:

First, centralization, such as wBTC and HBTC. They are issued by a centralized organization. Once the central institution goes bankrupt or is censored, it will cause the embarrassment that these Bitcoin anchor coins cannot be converted.

The BTC anchored to WBTC is stored in the cold wallet on the chain by the custodian BitGo, so WBTC is essentially centralized. The main risk of WBTC also originates from this. Although BitGo has managed $16 billion in assets, these assets are not BitGo’s own, and BitGo’s own valuation is much lower than WBTC’s market value. If BitGo misappropriated the BTC reserves corresponding to WBTC for other purposes or loses it, BitGo will go bankrupt at best, and WBTC holders will suffer heavy losses. In addition, the WBTC white paper does not mention how to pay if there is an accident in the BTC reserve.

Second, the utilization rate of collateral is low, such as tBTC and renBTC. Although they are issued in a decentralized manner, in the final analysis, non-BTC collateral locked in smart contracts is required to reduce the risk of volatility and misbehavior, and over-collateralization is required. For example, each minted tBTC token requires the value of collateral ≥ 1.5 BTC, and each renBTC requires the value of collateral ≥ 3 BTC. This kind of over-collateralization greatly increases the friction cost of native bitcoin and bitcoin anchor coins, and also limits their minting ceiling.

eBTC uses a decentralized and self-adjustable custody network based on the DeCus system to reduce the mortgage rate to 20% while ensuring the security of cross-chain assets. It is currently the only decentralized issuance in the market that does not require over-collateralization and The collateral is the Bitcoin anchor currency of the BTC asset.

Question 4:

Keeper, users, and smart contracts participate in the DeCus system. How do these three interact and collaborate to achieve a cross-chain decentralized BTC custody system?

answer:

As the core role of the entire system, Keeper is responsible for the custody of native Bitcoin assets, providing collateral (but the mortgage rate is lower than other Bitcoin-anchored currency solutions) and running nodes. Keeper is distributed through a method called “duplicate grouping”. Since Keeper can join or leave the network at will without permission, the whole process is completely decentralized.

The smart contract deployed on Ethereum is responsible for minting eBTC. Users can realize the tokenization of native Bitcoin assets in a simple and safe way. The following picture shows the eBTC casting process in a simplified way:

Dialogue DeCus: How to realize a cross-chain custody system with high capital efficiency?

Users who want to create eBTC should first submit a request to the smart contract on the Ethereum network, and then obtain the BTC multi-signature address of the designated Keeper group. After depositing a certain amount of BTC to the multi-signature address and submitting the deposit certificate, the corresponding amount of eBTC will be sent to the user’s ETH address. Users can convert their eBTC back to BTC at any time. The redemption process is similar to casting. Once the original BTC is received, the corresponding eBTC will be burned.

Question 5:

Will Decus issue its own system tokens? What is the general economic model?

answer:

The system token of DCS is DCS, with a total of 1 billion, which has not yet been issued. There are three main uses: participation in system governance, pledge and incentives. The general token distribution model is:

45% is an incentive for participants, of which 25% is used for coin mining, 10% is used for liquidity mining, and the other 10% is used for Keeper pledge mining; early investors and core teams will be allocated 33%, DAO The community allocates 15%, and the remaining 7% is used for product launch.

DCS plans to give airdrops to: 1. Users who have participated in various stages of testing (need to meet certain conditions) 2. Existing Bitcoin anchor currency holders 3) Users who have participated in the governance of the DeCus cooperation agreement, please pay attention to the specific plan Official Twitter, Telegram and Medium.

https://twitter.com/DeCusIo
https://decus.medium.com/
https://t.me/decus_official

Question 6:

Can you introduce DeCus’s investment lineup and partners? How did these collaborations unfold?

answer:

So far, a total of 16 institutions/individuals have invested in DeCus, including SevenX, FBG, Parallel ventures, dForce Labs, DODO, Conflux, Parallelventures, MCDEX, YBB Foundation, NGC Ventures, Kernel Ventures, Hotbit, and Mr. Block and For KOLs such as CryptoDiffer, the second round of financing will close soon.

Question 7:

TVL is currently an important indicator for measuring DeFi products. In what ways will DeCus motivate and enhance the TVL of the platform?

answer:

For the Bitcoin anchor coin platform, the amount of coins directly affects TVL. We currently plan to increase the amount of coins in two ways: one is to continue to expand the application scenarios of eBTC and optimize the profit model for users to use eBTC; on the other hand, users will be exempted from the cost of minting, and the cost of minting users will be reduced. Way to stimulate users to mint coins.

Question 8:

DeCus has chosen KeeperAuction novelly. Can you tell us about the rules and how should ordinary users participate? I think there are still airdrop rewards that the community cares about~

answer:

The stable operation of the DeCus system relies on the hosting network composed of Keeper. Our model determines that a batch of Keepers need to enter the network together to ensure the safe and stable startup of the system. Therefore, in the early stage of system operation, we need an effective and fair way to select Keeper, and Auction, that is, auction is the best option. There are three reasons:

1) No permission, which means that anyone who wants to become a Keeper can participate in the auction; 2) Transparency, which means that all participants can compete fairly under the set rules; 3) There is a “participation in discovery” similar to price discovery “This means that the true intention of becoming a Keeper (the number of bitcoins willing to be mortgaged) can be understood through the whole process.

The simple rule is that during the auction, candidates need to deposit the amount of Bitcoin they are willing to pledge, and the system will rank in real time based on this amount. By the end of the auction, the top n will be selected, and the number of pledges for the nth place will be the final pledge for each selected Keeper.

Our second round of Keeper Auction test is underway. The Ethereum test network, collateral and test ether required as a miner fee can all be collected through faucets. Participants do not have any costs themselves, and the top 500 users have the opportunity to get it. DCS, there are now less than 3 days before the end of the event, everyone is welcome to participate:
https://twitter.com/DeCusIo/status/1383345836952723460

For specific activity rules and operating procedures, please refer to this article translated by the community:
https://mp.weixin.qq.com/s/UEiRiqSoNrnhAIIORzB2ag

For more information about DeCus, please follow:

Website: https://decus.io/
Twitter: https://twitter.com/DeCusIo
Medium: https://decus.medium.com/
Telegram: https://t.me/decus_official
Github: https://github.com/decus-io

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