In recent months, DeFi has been the hottest direction in the entire circle. Although it has cooled down recently, DeFi will inevitably continue to develop.
After all, decentralized finance is the most suitable application scenario for blockchain. In fact, since the birth of Bitcoin, as a decentralized currency, it has been the most important DeFi application.
But in the current DeFi, the public chain that plays the most important role is Ethereum, which means that the current DeFi seems to be drifting away from Bitcoin, the core of the cryptocurrency world.
The main reason is that Bitcoin itself does not support smart contracts like Ethereum, so it is necessary to map Bitcoin into ERC20 tokens in Ethereum through cross-chain in order to introduce Bitcoin into the DeFi ecosystem of Ethereum.
Therefore, considering Bitcoin's absolute kingship in the entire cryptocurrency, Bitcoin's cross-chain is crucial to expanding the entire DeFi ecosystem.
Regarding the research on Bitcoin cross-chain, as early as 2014, several Bitcoin core developers jointly published an article titled "Enabling Blockchain Innovations with Pegged Sidechains" (article link: http://kevinriggen.com/files/sidechains .pdf) mentioned cross-chain solutions such as Federated peg and SPV proof.
Among them, Federated peg is a multi-signature scheme, that is, to transfer bitcoins to an address controlled by several multi-signatures, and then generate a corresponding mapping on the corresponding chain.
At present, this scheme is used to transfer Bitcoin across chains to other chains in actual operation, such as WBTC, renBTC, RSK, Liquid and so on. But the flaw of this scheme is very obvious, that is, multi-signature is essentially a custody scheme, and the user does not own the private key.
If several parties of the multi-signature run away together, the user has nothing to do.
So Federated peg is essentially a less centralized centralized solution, which completely violates the original intention of DeFi.
As for the SPV proof (light node proof) scheme, although decentralization without trust can be achieved, it requires Bitcoin scripting language to introduce a new OP operation code, and there are many problems in itself, so it has not been implemented.
Well, there is currently no perfect cross-chain solution for Bitcoin.
Since it is very difficult to realize Bitcoin cross-chain, we might as well change our thinking.
If the virtual assets linked to Bitcoin can be directly generated in the DeFi application, so that investors can participate in the long and short of Bitcoin, then the cross-chain step can be skipped. Synthetic assets in the Coinversation Protocol do just that.
That is to say, cBTC in Coinversation does not require users to transfer any real bitcoins, and holding cBTC can get the benefits of BTC rising.
Moreover, compared with traditional centralized contract exchanges, users need to have Bitcoin as a margin to participate in contract transactions. Coinversation's system does not require users to hold Bitcoin, and can participate directly by mortgaging the CTO.
And the Polkadot contract chain adopted by Coinversation itself supports smart contracts, and users have their own private keys without worrying about any security issues.
We can think of such synthetic assets as another form of "cross-chain". From a larger perspective, synthetic assets can not only generate assets on the chain, but also generate various off-chain assets, that is, stocks, gold, and commodities in the real world can also enter Coinversation "cross-chain".
