Improving the Federated 2-way Peg by Matt Luongo (Devcon5)
Channel: Ethereum Foundation
Date: 2019-12-08

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https://archive.devcon.org/archive/watch/5/improving-the-federated-2-way-peg-a-new-sidechain-design-for-trustless-bridges-on-ethereum

In this talk, we'll introduce a novel mechanism to maintain 2-way pegs, as well an initial implementation of a Bitcoin peg on Ethereum.
## Problem
Bitcoin's stable codebase is a strength. Developers are loathe to introduce significant changes, reasoning that a store of value should prioritize stable operation.
While this cemented Bitcoin's place in the market, we all know the costs- Bitcoin's ossification at the expense of public experimentation and diverse use cases.
In 2014, the answer to this problem was "sidechains". Trustless sidechains are the ultimate vaporware- and since 2014 the goalposts have moved.
## Approaches
Blockstream's Liquid touted itself as the "first production sidechain", built on a multi-sig federation. No hashpower validates the sidechain-- funds are fully trusted to 15 Bitcoin multi-sig participants.
BitGo's WBTC takes a similar tact-- but instead of building a new chain, custodians operate on Ethereum. Neat! Unfortunately, they require KYC :(
These centralized projects have a few custodians that can be convinced by governments-- or their own interests-- to censor or seize funds.
## Design
We propose a new approach-- the *bonded, multi-federated peg*. We believe this is the best candidate for a sufficiently trust-minimized alternative, unlocking Bitcoin for use in DeFi.

Speaker(s): Matt Luongo
Skill level: Intermediate
Track: Execution layer
Keywords: technical

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Devcon 5 was held in Osaka, Japan on Oct 8 - 11, 2019.
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