The ChainX community held an AMA with “AnchorDAO” in the ChainX public Telegram channel on 3 January. The main theme is “BTC-backed stablecoin architecture and DeFi risk control model”.
Bitcoin is still the most liquid and decentralized cryptocurrency in the world. This obviously positions bitcoin as a strong competitor for financial products that can benefit from trustlessness and decentralization. ChainX enables the Bitcoin protocol to be extended with smart contract functionality to enable the implementation of DeFi products. Furthermore, the BTC protocol is limited, it does not allow the exchange of tokens without an intermediary, having Pegged BTC and smart contracts, it solves this type of problem. ChainX released Taosim, the world’s first Bitcoin smart contract platform testnet, on November 16, 2019. Developers can finally deploy contracts based on BTC to create Dapp products.
On December 12, ChainX set up a $ 100,000 development fund to support outstanding teams to create the first-of-its-kind Bitcoin Dapp, and promote the development and implementation of Bitcoin applications! Bitcoin as a digital currency with the maximum consensus has enormous potential for wide range of applications, but due to the limitations of the network itself, many scenarios are difficult to materialize.
Fortunately, ChainX uses the light-node chain crossing technology to successfully take Bitcoin onboard the ChainX network. At present, X-BTC is about 190, and the number of L-BTC is as high as 16,188 with further growth in sight. ChainX has become the world’s largest second-layer expanding network of Bitcoin.
As of now, more than 10 teams have actively participated in the development of Bitcoin smart contracts. For better understanding of the projects being developed, we start embarking on a series of AMA on quality Bitcoin DAPP projects.
In this AMA, we will pivot today’s interview and sharing on “BTC-backed stablecoin architecture and DeFi risk control model” with the host raising 10 questions and community questions.
You can visit the AnchorDAO website for further details: http://b.usda.one
Here’s what AnchorDAO’s Chief scientist, Sheldon Luo had to say in the AMA.
Vo1D (ChainX Senator and Telegram Moderator)
Vo1D:
Tell us about you and your team ~
Sheldon Luo:
Hi, I’m Sheldon Luo, Chief scientist of AnchorDAO. Very glad to participate in this AMA. Tonight, I’m going to share with our bitcoin smart contracts Dapp. We will discuss the future of bitcoin in DeFi and the future of blockchain finance.
I am a master of software engineering from xi ‘an jiaotong university. Member of the National Engineering Laboratory for Big Data Analysis, and co-founder of the AnchorDAO Risk Control Laboratory (Beijing) with the Viking Research of Viking Capital. I was runner-up in the stable-coin-model of the WuDaoKou Blockchain Club of Tsinghua University, founder of Xi’an Blockchain Technology Application Association. Participated in the preparation of block chain course of xi ‘an jiaotong university. At present, I am mainly engaged in digital currency research.
Our team is from the National Engineering Laboratory For Big Data Analysis, with master’s or doctoral degrees from Xi’an Jiaotong University and Beijing University; The development team is from Wuawai and SF, which has serial years of producting in large-scale system dev and Ecosystem dev; Senior experts and scholars in the field of blockchain, big data, and industry experts such as the founder of IBM Hyperledger.
Vo1D:
Sounds great, you look to have a huge background, AnchorDAO is an open financial system. I believe that no one knows it better than Mr. Guangwu, founder of the project, so please give us an overview of the AnchorDAO financial system.
Sheldon Luo:
AnchorDAO is an open financial system through which any user can issue stable coins independently with multiple manipulations, as well as deploy stable coin Ano-Systems, chain-based insurance hedging, bond issuance/trading, and stable coin exchanging. USDA Users can set parameters in this system, such as anchor target, pledge rate, level line, and digital asset target. After the necessary parameters are set, AnchorDAO-system will deploy a series of s-contracts and establish a control model. The AnchorDAO-System is developed through s-contracts. It was early deployed on public chains (EOS / ETH / TRX) which support s-contracts. For the future, BTC will be supported with ChainX’s Xross-Chain technology to integrate the Xross-chain assets into an Ecosystem and build Xross-chain Open financial ecology.
Vo1D:
The volatility of the digital currency sector has made it important for financial models, especially DeFi products like DAI, encounter to CDP’s risk exposure for ETH drop. Moreover, The first stablecoin BitCNY had dropped 84% before long. How do you deal with that risk?
Sheldon Luo:
AnchorDAO risk control lab was established in Beijing in collaboration with Viking research institute, focusing on the risk exposure caused by digital currency volatility. Previously, AnchorDAO team also exported relevant risk control models for some projects invested by Viking capital. USDA (b.usda.one），the first product of AnchorDAO, there is a model called “Multi-Chain Risk Control System”. For this risk, we have built a series of dynamic mathematical models to deal with the fluctuations of the market. It can be seen that the team attaches great importance to DeFi risk control.
Vo1D:
Why ChainX ? What was the motivation that attracted you to ChainX bitcoin smart contract development? What advantages do you think ChainX has over other contract development platforms such as Ethereum Eos Tron?
Sheldon Luo:
The main advantage is that ChainX supports BTC smart contracts. There is no doubt that the best asset in digital currencies is the BTC. As a kind of financial derivative, the choice of BTC as the asset target is a necessary part of all DeFi products.
The second is the ecological advantage. Both ChainX’s $100,000 developer incentive and its built-in decentralized exchange will help AnchorDAO’s financial ecosystem.
Vo1D:
I’ve heard (to be honest, Kristen has anticipated it to me) that In June, 2018, you participated in the organization to launch the EOS main-net, and the CPU resource problem of the main-net has not been solved. From the perspective of developers, what’s your view about EOS and other mainstream smart contract platforms such as Ethereum and Tron, and how active are these DApps?
Sheldon Luo:
I am very disappointed with the EOS.
EOS is known as blockchain 3.0, a free and high-speed public chain using the DPOS consensus algorithm. In fact, in addition to causing a power struggle, the main-net of EOS suffers from the same congestion as ETH due to CPU problems, and its CPU resource payment is similar to ETH’s gas fee payment. In addition to throughput, there is also a problem of capacity: limited by the memory capacity of a single full node, which directly restricts how many addresses and how many DApps can be carried on the chain.
EOS disguised the capacity problem with tokenizing CPU and RAM resource. The capacity problem is not as an economic model problem, but as a technical problem. As the volume of data increases, this bottleneck is fully exposed. What we see now is that most of the 21 block producers in the EOS main-net are controlled by the Big Exchange. However, in order to save cost, the configuration of block producers is low, and the developers can’t even find any full nodes to use. Instead, it is those who are not responsible for the block produce without reward such as token pocket wallet that provide full node service.
The ETH congestion problem has not been solved yet, coupled with the continued low price and the potential power struggle between POS&POW due to the upgrade. Meanwhile the overall activity is very low, and now hundreds of users contribute the majority of the activity. TRX, for its founder-central reasons, has few opportunities for other developers.
Therefore, these three mainstream chains are not very friendly to developers, and the market is in urgent need of new development platforms and tools to bring new vitality into DAPP. EOS VC’s $1 billion eco-incentive has given developers almost no incentive at all since the launch of the main-net. For EOS’s developers, it is entirely supported by the developers themselves. The recently launched $50,000 incentive scheme is not nearly as big as the Pokadot’s ChainX. Now that the marketplace is slowly becoming more rational about public chain performance. Therefore, ChainX’s BTC smart contract platform is encouraging for developers because of ecological incentives and new developing tools in this cold winter.
Vo1D:
Can you describe the DAPP scenario you plan to develop and what specific problems are solved for bitcoin holders?
Sheldon Luo:
AnchorDAO’s first financial product is the USDA stable currency.
Vo1D:
Do You plan to issue stabecoin on multi-chain. Will they be convertible?How did that happen, exactly?
Sheldon Luo:
Yes,We will deploy the stable currency’s pledge issue contracts on multi-chain, including the one in ChainX. If used as a financial derivatives for stablecoin, it can perform this function on its own issued chain; If used as a medium of Exchange, there is a corresponding OTC for such conversion, at the same time, our team will provide exchange deployment service for relevant stablecoin partners to complete the conversion of stablecoin.
Vo1D:
Your anonymity system uses mixed currency schemes. What do you think are the problems of the existing anonymity schemes such as ring signature and zero-knowledge proof?
Sheldon Luo:
There are a lot of problems. Big Data Analysis: In the face of big data analysis, public chain anonymity is often unable to withstand. Just need to strictly record the sequence of funds, cumulative analysis, you can use big data to break the mixer. Like Tornado mixers.
Decompiler crisis: A full-chain currency mixer with contract code decompiler and most memory dump possibilities. At present, many mainstream full-chain anonymous mixers, if security engineers have the intention, can be in full-node synchronization and memory capture, decompiled its transfer information, and thus break its anonymous scheme. It’s a little more expensive, but it also offers a possibility. When the value is too high, such attacks should also be guarded against.
The cost of anoymity: As a common anonymous scheme, it will have a huge cost burden when the order is decomposed by the user’s spontaneous flow without any other means.
The bottom limit of ethereum: The gas fee mechanism of ethereum leads to its huge anonymity defect, after one party pays the gas fee to be retroactive, cannot achieve the complete anonymity.
Operating Speed Limit: the Aztec operation requires a lot of computing resources; each transfer will cost a huge amount of gas costs. Therefore, we need a high-performance public chain to complete the trusted encryption computation.
Vo1D:
Does your team have an audit of the contract code and what measures can be taken to ensure that the contract code is as valid as possible?
Sheldon Luo:
On Major Pulic Chain such as EOS / ETH / TRX, we do not consider security companies because we have developed similar projects. Whereas on emerging chain like ChainX, it is later audited by a security company as appropriate.
Vo1D:
What’s your expectation with BTC, I Mean What innovations do you see in your financial system and what kind of market will it bring to bitcoin?
Sheldon Luo:
Stability and anonymity are our two main innovations. In the future, it will serve users with privacy needs and provide more options for bitcoin holders.
The second is the diversity of financial products, we pledge to issue provide different period of insurance products, as well as introducing the bonds of traditional financial mechanism, including customized asset securitization, combination products, bonds futures products, bonds, a stable currency.
This is our financial insurance product, similar to credit defaulkt swap (CDS).
CDS is the most common credit derivative in the bond market. A contract in which the seller and the buyer perform a risk translation of a specified credit event for a specified period of time.
Vo1D:
It is a financial institute similar to insurance represented by a derivate?
Sheldon Luo:
Yep.
Vo1D:
What do you think are the advantages and characteristics of ChainX over other cross-chain projects?
Sheldon Luo:
ChainX’s most attractive feature is that it has integrated BTC light nodes within its own Relay chain.
At the same time, smart contracts can be deployed on the chain, which brings great imagination.
Furthermore, it is ready for fully decentralized cross-chain asset transfers, and is equipped with DEX applications for all types of asset matching for free. We have seen the power of MakerDAO on ETH and the unlimited potential of DeFi.
However, DeFi on ETH has not yet exploded to its full potential due to its value. If DeFi can be linked to a broader and more powerful infrastructure, it is certain to boost flourishing digital currency market. There is no doubt that ChainX has taken the lead in opportunity in terms of implement ability.
Vo1D:
Is the team determined to win the $100,000 incentive?
Sheldon Luo:
We has been deeply involved in blockchain for many years, and we are more optimistic about the potential for smart contracts on bitcioin to bring DeFi’s flourishing. We hope that new technology like ChainX will bring new vitality to the development of bitcoin, providing users with a free and transparent financial tool.
Vo1D:
Fair enought, wish to say good luck to you and your team
Sheldon Luo:
Thank you.
Vo1D:
OK, thanks to Sheldon for the wonderful sharing. Next is the Q&A session. Now you can ask Sheldon questions.
Grug:
What’s the major difference between DAI stable coins and stablecoins USDA?
Sheldon Luo:
DAI does not do anonymous cross-chain transfer now, and Anchor comes with anonymous cross-chain transfer. That’s our biggest advantage.
Joestar:
Can developers use USDA in smart contracts in the future?
Sheldon Luo:
Sure enough, our USDA contracts will run on all chains that support smart contracts. And that will open up a lot of opportunities for developers.
Kambing Berharap WIN:
Why would CHAINX requires smart contract functionality?
Sheldon Luo:
Because we need more DeFi possibly, rather than ETH monopolizing DeFi.
Thank you, everyone. Good night~!
About ChainX
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