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 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.
Professional arbitrage is unprofitable for Dai
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.
We can extend reserves with Bitcoin
Bonding curve pools can be extended with the additional liquidity.
External chain assets such as BTC could diversify the collaterals used in stable currencies on Ethereum.
Interconnecting blockchain based assets opens up possibilities for various financial derivative products.