The Next Big Step: Trustless Anchors
Rocket Stellar on the Interchain!
I wonder how you feel about this idea: “Trustless anchors are the new blockchain grail”. Does it sounds like obvious to you ? Or total non-sense ? If you’re not sure what I’m talking about, please allow me to make my point.
The current situation
What I like about blockchain is the robust design. When I own a lumen, I really own it. Meaning, nobody is going to steal it, duplicate it, destroy it or (really) prevent me to access it with a law. It’s secured by my private key and I’m the only one responsible to keep it safe.
Now, when I buy some LTC, EURT or XRP on Stellar network, it’s not the same deal, right? I need to give my trust to an anchor, and I do. I’m buying promise of LTC, EURT, XRP. I know 98% of us are (mainly) honest peoples, and I’m happy with the idea that anchor managers intent to offer a nice service and grow our network while paying themselves fairly for the job.
Still, I think bank account, I think fractional reserve, I think Tether, I think yeah but… This is not the blockchain revolution I signed for. I know we got a beautiful decentralized exchange (DEX). And that’s nice, really. Yet, something is missing.
Bitcoin qualities
Bitcoin is peer-to-peer made money. This is to say that bitcoin retained the fundamental qualities of previous peer-to-peer networks: decentralized and trustless. When you download a file peer-to-peer, this can be said trustless. Why ? Because whatever node you connect with, you know you’ll end up with the good file, right? No scam. Well, the file itself may be a scam, then it’s what you get. But the network don’t cheat.
Bitcoin is operating under the same design principle. We don’t care so much what node we connect to, because we know it’s secure by design. We know the printing rule, we know it’s not counterfeit, we really own it. This is arguably what made bitcoin so successful, as trust in fiats value and banks is understandably sinking.
Trustless anchor
An anchor is a node that prints a token on a blockchain for each token it receives from another. This is a 1:1 bridge between blockchains. Nowadays, we have to trust in its ability to be able to convert a token back to its native blockchain the same way we trust in the bank ability to give us money when we want to withdraw. The same way we trust an exchange will give us back the cryptos in our account. And we better be right.
A trustless anchor is an anchor that can’t be controlled, and that operate automatically under a set of well-defined rules. Exactly like a blockchain. A bitcoin emitted by a trustless anchor on the Stellar network will be a real bitcoin, because you are absolutely guaranteed that you can get it back on its native blockchain.
The design involves strong redundancy and smart contracts: blockchain technologies. This could be implemented by an independent entity/chorum, and get merged into the main code when perfect stability is reached. There’s a missing letter in DEX design. I’d like to see it back. I’m asking for a Trustless Decentralized EXchange.
Remitters selling cryptos
This is a nice side-effect. Right now, remitters can’t really do that because that would be selling promises of a Litecoin as a real Litecoin. The issue here is that remitters have no control over the anchors. It means that if something goes wrong, they can’t act on it but will have to bear the responsibility anyway.
With trustless anchor, they will be offered a way to sell real ether/litecoins/… without much further coding. Actually, anybody could go ahead with this business and sell foreign coins from Stellar network, providing they comply with legislation. Why would they do that? Well, because they can sell ‘x’ top value coins implementing only one protocol. Plus low transaction fees. Plus immediate access to an exchange.
This will give us something very interesting: volumes. Those sellers will literally suck in foreign cryptos into Stellar network, rocketing the exchange to another level.
RIP lightning network
I’m getting a bit playful there. I’d like you to consider this idea: “trustless anchors will kill lighting network”. Why would you keep bitcoins on the bitcoin blockchain while you could have them on the Stellar network where transaction fees are a fraction of cent?
The day Stellar implement trustless anchor for a crypto, it does offer a lightning network for it. The day Stellar offer trustless anchors for the main actors, it becomes an awesome API for building rock-solid exchanges.
Demand is here
If like me you’re reading the news, you heard about things such as tether issues and worry that lightning network will destroy bitcoin decentralization. I’d say there’s something important to grab here.
We got the blockchain, and we’re still digesting it. Somehow, when facing a problem we may answer with the old solutions. Easier, faster. Yet, when an innovation is going the right way, we can tell it. TDEX is a continuation of what caught our attention in blockchains. This is the next logical step. I have no doubt a cleverly design TDEX will get massive adoption right away.
Let’s do it
Well, you probably noticed that I didn’t shared any real clue of how to do it. I have a few schemes here and there in my notebooks. Enough to know that it’s a very big task. My few clues won’t do it. Yet, I can at least speak about it and spread the idea. Even if it’s more a bottle in the sea than willpower in action.
Stellar is a very good candidate for implementing this. It’s not the only one. Some projects are already on their way, such as ADA. I’m claiming that TDEX are the next big thing, and the first ones to get there will cement their network in a leader position for quite a time. What do you think about it ?
And, really, how far from it are we ? What are the next little steps ? What are the seemingly unsolvable issues ? And the hint we already got ? This is going to be a collective achievement, with great benefits. Hooray for the interchain !
