Cross-chain synthetic battle: How Ocean DeFi can attract millions users from other blockchains
But the fact is the growth takes place mostly on Ethereum, the blockchain which many well-known DeFi products such as Uniswap, Kyber Network, Aave, etc are based on. Users holding coins & tokens in different blockchains are reluctant to get involved in the various DeFi projects built on Ethereum. If Bitcoin, Tron, EOS, ETH & ERC20 tokens, etc can be all represented in only one decentralized network, the future of interchain DeFi will be open.
Empow Network’s synthetic protocol is built to attack this problem. The idea of the protocol is to bring assets in other blockchains, including native coins & deployed tokens, to Empow Network, a highly scalable blockchain that is supporting 8,000 transactions per second at the moment. Once they are all represented in the form of synthetics, the fast interchain DeFi platform powered by Empow Network could be built.
This piece will present how coins & tokens on Bitcoin, Ethereum, TRON, and EOS Blockchain will be operated as synthetics on Empow Network. We will focus strongly on explaining the birth of BTC(em) — the similar explanation can be applied for ETH(em), ERC20(em), TRX(em), TRC20(em), and EOS(em).
BTC(em): your BTC in synthetic version on Empow Network in 3 simple steps
The converting mechanism operates via a general bridge design that connects Empow Network to Bitcoin blockchain network.
To obtain BTC(em), the user first submits a converting request to the Interchain Smart Contract with information about which public coins they want to convert and the amount. The Interchain Smart Contract selects the trustless Keeper, or group of Keepers (Keepers — ones playing the role of custodian of users’s fund) for the public coins (BTC in this case) and provides the user the Keepers’ Bitcoin deposit addresses. Once the deposit is confirmed on Bitcoin blockchain, the user initiates a converting transaction on Empow Network along with the deposit proof. A deposit proof is a Merkle branch linking the deposit transaction to the block it is time-stamped in, proving that the deposit transaction has been accepted by Bitcoin network.
Empow Network nodes verify the converting transaction and the deposit proof inside it in particular. Once the deposit proof is verified, synthetic BTC(em) are minted at a 1:1 ratio.
So, 3 steps in the process synthetic converting
- You take your BTC
- Call upon a “keeper group” to hold the BTC safely and trustlessly. You deposit BTC into keepers’ Bitcoin addresses
- Once your BTC has provably landed with the keepers and Empow Network nodes verify the converting transaction and the deposit proof succesfully, you receive BTC(em) at a peg of 1:1
The prerequisite for being a Keeper is that Keeper must collateral their assets including a number of EM (the native coin of Empow Network) and BTC with the Collateral-to-Deposit ratio of over 100%.
The process can be reversed just as easily using the exact same steps.
Re-convert synthetic BTC(em) to BTC in 3 steps
Unconverting is the reverse process of converting: turning Empow-based synthetics back into normal assets.
The user initiates an unconverting transaction on Empow Network with information about which synthetics they want to unconvert and the amount (BTC in this case).
Empow Network nodes verify the uncovert transaction, burn the synthetics, and issue a burn proof.
The user then submits the burn proof to the Interchain Smart Contract, which verifies the burn proof and instructs the Keeper, or group of Keepers, to release BTC that back those BTC(em) at a 1:1 ratio.
Once the release is confirmed on Bitcoin network, the Keeper submits the release proof to the Interchain Smart Contract. Similar to the deposit proof, a release proof is a Merkle branch linking the release transaction to the block it is time-stamped in, proving that the release transaction has been accepted by Bitcoin network.
After verifying the release proof, the Interchain Smart Contract frees up the Keepers’ collateral. Keeper now can withdraw their collateral or start taking new user deposits.
With the decentralized community of Keepers, counter-party risk is reduced
The Empow Network’s synthetic protocol addresses counter-party risk, thus ensuring safety and transparency in the process of converting and unconverting. The protocol uses a system of Keepers’ groups that allows BTC(em) to go through the hand of a Community, not a trusted middleman. So, there is no longer a possibility of the middleman collapsing, as happened in many of the high-profile thefts of recent years.
Another thing to make sure that Keepers will act responsibly in the process of converting and unconverting is the collateralization. There are 2 types of collateral.
- Firstly, one need to deposit 1,000,000 EM as their initial collateral to join the Keepers group.
- Secondly, Keepers must post a bond of their BTC being deposited by the user in order to fulfill their role; this acts as collateral to ensure good behavior. If any of the signers decided to “cheat” and steal the user’s BTC, the bond would be forfeit and the signer would lose more than they had gained through stealing. The exact Collateral-to-Deposit ratio (CD ratio) will be identified specifically based each converting and converting transactions and the market condition at the time the transactions take place. Technically, CD ratio ranges from 100% — 150%.
BTC(em) is fully backed by BTC
BTC(em) is fully backed by Bitcoin at a rate of 1:1. This means that for every BTC(em) in circulation, there is always at least one BTC in value locked in the system. This should give token holders confidence that they are not at risk of falling victim to a run on the asset.
Use BTC(em), TRON(em), EOS(em), ETH(em) to leverage the power of Ocean DeFi
It’s true that Bitcoin has clear dominance in terms of overall crypto market capitalization, with a combined value greater than that of all other tokens put together. That’s why the appearance of BTC in the form of BTC(em) would strengthen the operation of and help attracting more users to Ocean DeFi.
The same thing can happen with the appearance of other coins in the form of Empow-based synthetics. When the synthetics token is launched on Empow Network mainnet, it will offer users of other blockchains a transparent, decentralized, and safe way to put their assets. to work. Users of BTC(em), TRX(em), EOS(em), ETH(em) will be able to use their BTC, TRX, EOS, ETH respectively to take part in not just the Ocean DeFi interchain platform but also other innovative projects and opportunities being developed by Empow Network's community.