Use Cases for Terrabridge (ETH<>BTC)

Terra-Bridge is a protocol for interchain transfers between Ethereum and Bitcoin. Here we explore the possible applications of this protocols for Decentralized Finance Services.

DEX Trading

DEX benefits assumptions:

  • Lower operational risks such as hacks and thefts

  • Overcomes government censorship (in countries like China and India)

  • Exchange can impose terms or block users assets or accounts without notice

  • Possible manipulation with trading orders and wash trading to create the “impression” that a particular trading pair is attractive

But DEX now support only

Wrapped BTC (wbtc) is a possible solution.

Extending Maker DAO Collateral Pool

Facts:

  • Professional arbitrage is unprofitable for Dai

Hypotheses:

  • Maker DAO needs scalable collateral reserves to grow?

Dai’s disability to scale has no impact on Maker because that was never the goal, to begin with. Maker is a decentralized and very efficient version of centralized lending services like BlockFi, the primary use case of which is tax arbitrage:

A loan from BlockFi enables you to use your cryptoassets as collateral and receive USD to your bank account. Borrowing against your cryptoassets enables you to receive liquidity now but does not trigger a capital gains tax event and, depending on the use of funds, the interest may be deductible against capital gains and other investment income.

The two other prominent use cases are long leverage and treasury/payroll management for ICOs. The basic idea is always to generate liquidity ahead of a future liquidity event — spending money that you expect to receive later. Either from selling ETH after a tax deadline or from selling it at a higher price at a later time.

Solution Hypotheses:

  • We can extend reserves with Bitcoin

References

Staking BTC in the Bonding Curve

Bonding curve pools can be extended with the additional liquidity.

Stable coins

External chain assets such as BTC could diversify the collaterals used in stable currencies on Ethereum.

Financial derivatives

Interconnecting blockchain based assets opens up possibilities for various financial derivative products.