[bisq-network/bisq] Investigations for a new trade protocol (#5430)

[chimp1984]

I looked into Thorchain: https://docs.thorchain.org

It is a quite sophisticated project not using classical atomic cross chain swaps but converting one asset to RUNE (their asset) and then from RUNE to the target asset. Funds on the native chains are controlled by a large group of signers (24of36) who have to bond a high amount of RUNE (1M). Liquidity providers can add native assets and receive RUNE in return. Once they leave they return the RUNE, get paid fees and get back their asset as share of the pool.
 
On a high level its a federated Shapeshift model, where the federation members controlling the funds and need to provide a bond for security. As they use their internal asset it comes with feedback and volatility risks (e.g. if RUNE crashes the security is lost and node operators can steal the assets and lose only the now worthless RUNE. In fact its in their economic interest to do that as if they keep their RUNE bond they risk that it has lost all value. Beside that running a node is only for highly skilled sys admins who are experienced with running server clusters. It also requires very high capital investment. This combined reduces the level of decentralization and I assume the dev team are running most of those nodes which is probably also their revenue model as they do not earn anything on fees (only node operators and liquidity providers earn fees). It would also make sense as all the security lies in the hand of those nodes, so they probably prefer to keep a super majority controlled by them. As nodes are anonymous they can hide from potential regulatory pressure. 
I did not spend so much time on it to be sure about my conclusion but thats my interpretation.

All in all no model what Bisq could take ideas from and the overall security is IMO fragile as well as I doubt there is a high level of decentralisation.

Beside that the algrithm for determining the price comes with some costs (slippage) and price is only determined by arbitrage traders (bots) who take advantage of price imbalances to external exchanges. I doubt this is the most efficient price discovery method. 



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