[bisq-network/proposals] Off-chain trading using a lightning network of BTC & tainted BSQ (#312)

[chimp1984]

I think i was wrong with the 4 x bond requirement, 2x should be the minimum as burning one part of the bond pair will invalidate the other.

Further I think a version without Carol should be possible as well and would look like that:

Taint tx:
Input 1: 10k BSQ from Alice
Input 2: 10k BSQ from Bob
Output 1: 5k TBSQ to Bob (corresponds to input 1)
Output 2: 5k ATBSQ to Alice (corresponds to input 1)
Output 3: 5k TBSQ to Alice (corresponds to input 2)
Output 4: 5k ATBSQ to Bob (corresponds to input 2)

Un-taint tx:
Input 1: 5k TBSQ from Alice
Input 2: 5k ATBSQ from Alice
Input 3: 5k TBSQ from Bob
Input 4: 5k ATBSQ from Bob
Output 1: 10k BSQ to Alice
Output 2: 10k BSQ to Bob

I was not sure about the details how you defined the input - output rules, but to have an atomic tx where both taint their BSQ we would need a rule that 1 input maps to a pair of 2 outputs (TBSQ / ATBSQ).

So by that in a non cooperative outcome either trader can burn the TBSQ of the peer and their own ATBSQ and thus destroying both bonds. The DAO might reimburse the side who can proof their case (e.g. following mediator/arbitrator decision).

I think that model can avoid the security deposit and does not require any blockchain for the trade currencies pairs (e.g. trade apples to bananas). LN can be of course used for a BTC transfer but is not enforced by the protocol.

Of course it would still require a BSQ LN fork as we don't want ot have the 2 txs. But even without that I think it would be an interesting alternative to the current on-chain protocol (but would not justify the effort and come with the issue if high costs for the bond).

The problem that traders require at least the amount what they want to trade additionally as bond could be addressed by a lending market, so they pay some interest rate for getting that load.

It would be great if we could find a scheme which is not based on BSQ but could work with BTC over LN. Beside the challenge to get our own LN fork the volatility risk and dependency on the BSQ/DAO economy carries considerable risks.
  


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