Oddbean

This has been my investment thesis from the beginning, but I am still waiting for a convincing answer to the problem of custody. Let's say I hold BTC and there's a lender interested. We agree to some terms. Broadly speaking, interest, period, overcollateralization, margin call limits, and minimum monthly payments to be made. All good, we're on the same page. Then what? I'm supposed to put my BTC in a multisig wallet? Who controls it? It would seem we must introduce a third party that we both can trust. That's not BTC, as far as I'm concerned. Other crypto projects have "smart contracts" that can take care of all that. Does BTC have the ability to handle such complex contracts? It's a genuine question of which I ignore the answer. Does anyone have a thorough, believable answer? (Before anyone comes in with the usual answer: NO, "layer 2, bro" is not valid answer. Layer 2 is not Bitcoin). nostr:nevent1qyvhwumn8ghj7un9d3shjtnndehhyapwwdhkx6tpdshszrnhwden5te0dehhxtnvdakz7qg4waehxw309aex2mrp0yhxgctdw4eju6t09uq3wamnwvaz7tmjv4kxz7fwwpexjmtpdshxuet59uqzq6teqxzdxsg3k5a3suj2zeyel26fccpe7rx6ygztp6xvwmqhekf5rctatn

nostr:nprofile1qqszjy3du4wgp7tfy8rgguumyee2rte73jyqsfp4d6n75gxxypg4yyqpz4mhxue69uhhqctfvshxumewwd68ytnrwghsz8nhwden5te0dehhxarj9ekkz7rfd4skx6t5v9jx2mpwdaexwtcprdmhxue69uhhyetvv9ujumtpva5kxcmfw3ujumrfwejj7x4v90y and nostr:nprofile1qqszw0ncsrfc6wd8lv3cal8cj4apkke8aqv3y75ys05h2st2p2g035spz3mhxue69uhhyetvv9ukzcnvv5hx7un89uq32amnwvaz7tmjv4kxz7fwv3sk6atn9e5k7tcpzdmhxue69uhhqatjwpkx2urpvuhx2ue0psxmsq You control 1 of 3 or 1 of 4 keys. Depending which platform you use.

In HH there are 3 keys - one to lender, one to borrower and one to HH. You need to have 2 keys at least to move collateral. In Debifi 4 keys - lender, borrower, Debifi, authorized (independent) key holder. You need to have at least 3 keys to move collateral. If there is dispute - support aģents will solve it and co-sign with the winning party. But tbh it's rarely the case. Game theory and consensus are powerful tools 😎

I still trust code more that a third party. Any of these platforms could act against me for any number of reasons. From being in cahoots with the other party to simply steal my shit, all the way to being forced to give up the key by a criminal actor, like a government agency. Also, human arbitrators make subjective interpretations and I may still disagree with their opinion, and there's nothing I can do if they decide against me. The output of a smart contract is neither interpretable nor capable of conspiring or of being pressured into acting in a bad way.

In the case of Lend by Hodl Hodl, the lender controls one key, the borrower controls a second key, and Hodl Hodl controls the third key to be used only if a dispute arise between lender and borrower. If you need more information please send your question by email to support@hodlhodl.com We will be happy to help you.

But one thing that would seem basic and absolutely necessary is BTC stablecoins. If I'm supposed to pay back a certain fiat amount every month, there's no other way than paying back through the smart contract, which means a Bitcoin-USD token.

It's not so much that I'm looking for it but that I don't see another way for BTC to keep its property of being trustless and be collateral at the same time. My bet in BTC is predicated on the assumption that this will eventually be solved, because other inferior projects have solved it. But it would seem not yet.