Worker Proposal Idea: Using an EOS smart contract to replace/improve Bitcoin

exploringeosexploringeos Posts: 20 Jr. Member - 1/5 EOS Tokens

I posted this in another category, but I think it's more appropriate here. Also I'm adding some more thoughts.

Original version here: https://exploringeos.com/how-to-make-bitcoin-actually-usable/

Worker Proposal:

1 – Create a smart contract that has control over a bitcoin wallet.
2 – Every time someone sends bitcoin to that wallet they include as part of their transaction their EOS address.
3 – The smart contract then creates tokens at a 1:1 ratio of the number of bitcoin that were received in the wallet.
4 – Next the smart contract sends 100% of those tokens to EOS address that was included in the bitcoin transaction.
5 – (Optional) 99% of tokens are sent and the remaining 1% is a fee that could be used in a few different ways and may not even be necessary.
6 – If someone sends the token back to the contract with a btc address attached, they will receive an equivalent amount of btc (minus the btc network fee of course).

An EOS token 100% backed by BTC making it faster, feeless and usable in everyday transactions.

If this were popular enough the btc blockchain may cease to have sufficient transaction volume to support the btc network, especially as the mining reward drops off. In which case, EOS replaces all of BTC with a single smart contract :) I know I know it's a long shot but I can dream.

I don't actually know enough about smart contracts to know if this is possible.

Worker proposal could fund the development of this and the tokens to stake to run it so that it's free for users. The fee could be done away with if the WP were to fund enough for the stake. Could start with small stake and add more if it gets popular. Otherwise, the optional fee could be traded for EOS to stake.

Would be great PR for EOS and would potentially drive crypto adoption for regular transactions.

Potentially a much better solution than the lightning network.

What do you think?

Is it even possible?

@Samupaha @Branden_Espinoza @mjhomb @Johnc @Teddy

Comments

  • CraigMEOSCraigMEOS Posts: 9 Brand New

    Anything in this space is possible. However, I believe that the contract and BTC address would have to hold the BTC that is deposited. This sounds very similar to USDT, except it would be tethered to BTC and also be 100% backed by the BTC held within the said BTC address. There are issues when it comes to who has access to this BTC account (maybe executing a smart contract could be the only way to access the account), how much value is the community willing to allow this BTC address to grow? I wouldn't trust more than a few BTC to just sit in an address without the implementation of cold-storage.

    Possibly more feasible, and would take the strain off of single addresses hodling so much coinage: Use a wrapper around EOS blockchain in which it can transact with all blockchains as long as EOS is upgraded to support the newest coin/token...

    Let's say, BTC gets sent to your EOS address. The EOS blockchain would recognize this address and see that it is in fact BTC by doing standard coin/token checks using the block explorer(s) for BTC/BCH transactions. The wrapped BTC would look and act like BTC, and by using an interchain (if possible) smart contract on EOS, a BTC address would be automatically created for your EOS account. Additional deposits could be made with the user able to define if they want multiple BTC accounts or a single BTC account.

    On blockchains which use smart contracts already, like ETH, it may work. The contracts would be on that blockchain for instance. In other words, EOS devs would create a smart contract on the ETH platform using Solidity which would be used to create other smart contracts linked to individual EOS addresses for which ETH gets sent. Then EOSIO would need to include code which reads from those smart contracts and enables an EOS wallet to see the ETH within the EOS address.

    "True decentralization is simply government transcendence."

  • turbotrainedbambooturbotrainedbamboo Posts: 30 Jr. Member - 1/5 EOS Tokens

    Yeah we'd have to "auto-buy" BTC when the contract was hit, or hold a ton of it to offer in exchange on demand. Both approaches have major pitfalls. I follow any "decentralized exchange" news carefully b/c there is actually as far as I know no way around this.

    As far as I can tell, all the projects that are out there for ERC20 exchanges in a" decentralized fashion" use "reserve funds" and "reserve managers". In essence, whales who are delegates. Or they use their systems to wait for orders to match up, and facilitate the exchange. The contract you interact with handles the swap. In the reserve system the reserve managers "Stake" IS the "reserve token funds" they agree to use to facilitate the "decentralized exchanges". I quote that not because the term is incorrect, it is decentralized, but only just so.

    What you're inquiring about is basically done right now on ERC20 through 0x protocol and the like. However, as I mentioned there is either a wait for a buy order to match up or a reserve fund in the background that is managed. I think EOS will go down this road eventually, and possibly with more finesse than what I just described. These are early days, but I'm not positive EOS itself (as a WPS created contract) would do this (maybe I'm wrong).

  • joshkauffmanjoshkauffman Posts: 21 Jr. Member - 1/5 EOS Tokens

    One thing I'm missing here is how is this worthwhile doing? It sound like you're just saying "Let's trade Bitcoin for EOS" Unless I'm missing something? Why not go on an exchange and just trade your BTC into EOS?

    Something similar makes sense for inter-blockchain communication. However I'm missing the part of your proposal where you mention the benefit (other than a potential for BTC to lose usage).

    Representative from EOS Canada
    All opinions my own unless stated otherwise

  • exploringeosexploringeos Posts: 20 Jr. Member - 1/5 EOS Tokens

    @joshkauffman The main benefit comes from bitcoin's name recognition and market dominance which is much higher than EOS at the moment. To the lay user, they could feel better about the fact that they are still using bitcoin and not some "scary altcoin" while making it usable.

    This is similar to the US Dollar which borrowed credibility from the Spanish Silver Dollar and eventually transitioned completely away from Silver backing.

  • exploringeosexploringeos Posts: 20 Jr. Member - 1/5 EOS Tokens
    edited June 24

    @CraigMEOS I don't really know enough about cryptography etc. to know if what I'm proposing is actually possible, but the ideal scenario is that no one has access to the private key and that the btc can only be accessed by the smart contract. That way the only counter party risk is from bugs in the smart contract. Maybe it's impossible to lock the private key in the smart contract somehow. I was hoping there'd be some cryptographic magic to make that possible :)

    Maybe multisig btc wallets could do something here, but I doubt it.

    I don't think it's worth doing if someone has to hold the btc keys.

    Let's say, BTC gets sent to your EOS address. The EOS blockchain would recognize this address and see that it is in fact BTC by doing standard coin/token checks using the block explorer(s) for BTC/BCH transactions. The wrapped BTC would look and act like BTC, and by using an interchain (if possible) smart contract on EOS, a BTC address would be automatically created for your EOS account. Additional deposits could be made with the user able to define if they want multiple BTC accounts or a single BTC account.

    Wouldn't this be basically burning the BTC though with no way of redeeming?

  • CraigMEOSCraigMEOS Posts: 9 Brand New

    @joshkauffman said:
    One thing I'm missing here is how is this worthwhile doing? It sound like you're just saying "Let's trade Bitcoin for EOS" Unless I'm missing something? Why not go on an exchange and just trade your BTC into EOS?

    Something similar makes sense for inter-blockchain communication. However I'm missing the part of your proposal where you mention the benefit (other than a potential for BTC to lose usage).

    The benefit would be to make a user friendly wallet system on the EOS platform. A wallet where a novice user will feel comfortable using. The wallet could eventually hold (or look like it is holding to the user) every coin that exists. Someone just beginning in digital asset investing would want to use this EOS wallet because it will be feeless and hold any asset the investor wants. This wallet could simply map addreses to their EOS account, either automatically or via the user mapping a wallet address they currently own.

    I consider myself as a seasoned trader/miner and would love a wallet like this, as I have so many wallet addresses it makes it nearly impossible to see just how much digital assets I am currently hodling.

    And once this wallet comes to fruition, EOS could potentially become the largest digital asset trading platform on the planet. Did I mention "feeless"? 😀

    "True decentralization is simply government transcendence."

  • CraigMEOSCraigMEOS Posts: 9 Brand New

    Just another concept:

    EOS is a perfect platform to create an all-in-one wallet solution. Coins which are based on smart contracts within other blockchains, ETH for example, I'm guessing EOS devs could create a smart contract on that platform which could be used to map EOS addresses to an ETH address. Then anyone who sends ETH to that contract address would have an ETH address mapped to their EOS account. Then EOS wallet software would display the amount of ETH (or any other smart contract based chain asset) within the EOS wallet.

    With non-smart contract platforms, such as BTC, the wallet could have a list of these assets. The EOS wallet user could select one of these assets, for the discussion, we will say BTC. Once BTC is selected the user could simply press the button labeled "Map BTC address". Once the user maps the BTC address to their EOS wallet, any BTC the user sends to that mapped address would appear within the EOS wallet and users could then send and receive BTC using just the EOS wallet. You could prolly even make it to where the smart contract changes who owns the BTC, that way the transaction would not have to use BTC's blockchain, but would change ownership through the smart contract. The issue with this method, is that the sender just sent their mapped BTC address with the transaction. But to solve the issue, the EOS wallet could pop up a notification of a newly created BTC address, which is now mapped to their EOS account.

    Any EOSIO devs see this as being feasible?

    "True decentralization is simply government transcendence."

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