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510 sats \ 1 reply \ @cmd 3 Jul \ on: Ducat claims collateralized loan liquidations enforced onchain, no 3rd party bitcoin
The definition of custody has been bastardized by marketing. True non-custody means you and only you can withdraw funds at any time. Anything beyond that, there is some shared custodial relationship.
I think people are afraid to call their project anything other than self-custody. Nobody wants to hear the boring details of your contract. So you just say the magic words of "self-custody" and people nod their heads (hello ark).
It's essentially a rune. The protocol for runes is actually quite simple and elegant for alternative assets. They are still a shit-coin though.
The loan contract is a 2-of-2 multi-sig between the borrower and the FROST key, with an extra spending path (for liquidation) that is the FROST key + pre-image from a price oracle. AFAIK spark setup is more like a FROST key wrapped in a 2-of-2 musig key.
All lending protocols rely on the multi-sig and price oracle not colluding. There's really no way around this. You can try to bury the problem under complex multi-sigs or staking / slashing mechanisms, but you end up with a cluster-fuck solution.
Unfortunately there is a lot about the protocol that is not in the docs (yet). I know all the dirty secrets though.
GENESIS