Is There A Way To Prove Mints Aren't Inflating Supply? \ stacker news ~ecash

Is There A Way To Prove Mints Aren't Inflating Supply?

5165 sats \ 38 comments \ @siggy47 21 Jan ecash

Dumb question, maybe. I was listening to Calle talk about this on WBD, but this episode was back in April and he said the issue was being addressed.

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741 sats \ 5 replies \ @Wumbo 21 Jan

This is not a perfect solution but one option I heard is if leaving a Mint and moving to another Mint is made easy and cheap enough, occasional bank (mint) runs could be an option.

Basically make bank runs so easy to do that it highly encourages Mint runners to be prepared.

It is not a if but a when that a mint will have to "prove" they have 1 to 1 reserves.

349 sats \ 2 replies \ @freetx 21 Jan

How will you be able to vet all these different mint operators that you would move to? You go to webpage that has list of 1000 different mints with random internet monikers...who do you trust?

I think only answers are: small known group and/or limited duration exposure to mint (you lock up funds for 1 day, etc then withdraw).

3 sats \ 0 replies \ @Wumbo 21 Jan

Agreed, I can see using many mints and for short periods being "best practice"

1 sat \ 0 replies \ @cryptofolyo 21 Jan

it should be ideally local community of people known to each other.

10 sats \ 0 replies \ @calle 28 Jan

You can automate bank runs: https://gist.github.com/callebtc/ed5228d1d8cbaade0104db5d1cf63939

10 sats \ 0 replies \ @_b_o_n_e_s_ 22 Jan

wouldn't the ease of this successfully being pulled off depend on lightning liquidity surrounding the mint?

548 sats \ 0 replies \ @Scoresby 21 Jan

The fedimint website lists debasement as a potential problem under their tradeoffs section. From what they say ecash's privacy elements make it difficult to audit.

I think the guardians can audit how many tokens they have created vs how much bitcoin they have, and they could publish on chain addresses so users could survey those, but users would still have to trust them that they didn't create tokens greater in value than the amount of bitcoin they hold.

Also: only guardians can create tokens (or at least they have to sign off on the creation) so if unbacked tokens were being created it would mean that the people you are trusting not to rug you are lying to you on another count.

666 sats \ 8 replies \ @nicosey 21 Jan

you need mercury layer for that...

0 sats \ 0 replies \ @joda 31 Jan

Statechains still require trust though.

0 sats \ 6 replies \ @_b_o_n_e_s_ 22 Jan

hello, can you please expand on this one, how so?

0 sats \ 5 replies \ @kevin 22 Jan

Mercurylayer gives you full custody at all times, no need to prove anything :)

Read more here: https://mercurylayer.com

0 sats \ 4 replies \ @_b_o_n_e_s_ 22 Jan

haha... saw that page when release was announced here. I need the ELI5 version though 🙃 I get the general idea that ownership of private keys is passed around.

so does/can/will mercury function in similar way to these ecash mints?

0 sats \ 3 replies \ @kevin 22 Jan

Yes, there's nothing stopping it technologically from functioning in a similar way. Someone has to build it of course, but it shouldn't be much harder than building something for an ecash mint. It's kind of the same principle.

A Fedimint can act as a lightning gateway to the outside world letting you receive/send ecash.

Similarly a mercurylayer statechain provider can do the same. Act as a LN gateway and give you statechain "UTXOs".

0 sats \ 2 replies \ @_b_o_n_e_s_ 23 Jan

right. right. that sounds really good. and sorry to be annoying but just to take back to the top and tie it out for me, what you're saying is: there can be cryptographic proof of the IOUs in a statechain, but not fedimint?

0 sats \ 1 reply \ @kevin 23 Jan

Yeah - in addition to that there’s also the fact that if a Fedimint goes down you are truly fucked, in a mercurylayer you can still go back to the base chain since you have a transaction you can broadcast :)

0 sats \ 0 replies \ @_b_o_n_e_s_ 23 Jan

thank you sir ✌ makes a tonne of sense. appreciate the insight and look forward to seeing more statechain stuff being built out then

reply on another page

561 sats \ 2 replies \ @badabing 21 Jan

Proof of liabilities:

https://gist.github.com/callebtc/ed5228d1d8cbaade0104db5d1cf63939

0 sats \ 1 reply \ @erik_ 21 Jan

+1 still a work in progress as far as i know.

0 sats \ 0 replies \ @calle 28 Jan

I have an experimental PoL server running already for the testnut mint. It's going to take a while until wallets can adopt this, there's still a ton of possible optimizations to make this be effortless. But the sheer existence of a possibility to audit ecash mints is already very bullish to me.

413 sats \ 6 replies \ @freetx 21 Jan

No, there is no cryptographic way to ensure you are not being frac-reserved.

The only ways would be operationally (ie. coordinated bank run feature of wallets, etc) but these all have usability and potential fee impacts.

To be clear, other federated solutions (ie. sidechains like Liquid) have an auditable supply of tokens issued. So all of this is a matter of trade-offs.

The issue I see with Chaumian eCash long term is that the tendency will be for federations to grow in size (network effects). Who believes Coinbase, once they become the biggest mint, wont reserve-frac their users?

70 sats \ 4 replies \ @siggy47 OP 21 Jan

Until this is resolved it seems to me that all large organizations running mints should be avoided, similar to our mantra of "get your coins off exchanges." That's why I see the use case as small family and friends mints right now.

303 sats \ 2 replies \ @freetx 21 Jan

Yes. Either small known-party mints or conversely short time-duration mints.

I think these "ad-hoc" mint setups could be really good (ie. my 3-day festival idea I've posted about in other threads). So in this case the threat to frac-reserve would be limited by your time exposure to the mint itself. (add an auto expiry function added to Cashu protocol?....hmmmmm....)

14 sats \ 0 replies \ @siggy47 OP 21 Jan

If I remember correctly, in the early days this seemed to be the use case everyone envisioned. I guess it changed at some point?

0 sats \ 0 replies \ @0359d785c8 22 Jan freebie

That is what I'm talking about. Use it and trow away. But this is just banking on steroids. Our own version of rug pulls.

406 sats \ 0 replies \ @0xbitcoiner 21 Jan

Now I see your concern from the other day. I didn't realize this was even an issue

0 sats \ 0 replies \ @0359d785c8 22 Jan freebie

That is why I just see ecash more like a toy, use it and immediately cash out for real Satoshi.

308 sats \ 0 replies \ @jakoyoh629 21 Jan

Good point. I've been reading about fedimint and I've also heard people talk about it, but I can't find anything. There should be a way to confirm these values.

314 sats \ 3 replies \ @benthecarman 21 Jan

You can audit how much the mint has on-chain but you can't verify how much ecash has been issued. This is kind of an impossible problem because ecash is basically just a signature, there is no way to stop the federation from creating signatures without you knowing.

0 sats \ 2 replies \ @_b_o_n_e_s_ 22 Jan

how do signatures work, is each ecash token signed by all guardians? or could guardians check number of every other guardians signatures, and see if there are discrepancies between each other?

42 sats \ 0 replies \ @benthecarman 22 Jan

It’s an aggregate sig by the federation.

0 sats \ 0 replies \ @_b_o_n_e_s_ 22 Jan

ah, but guardians incentivised to not have their mint implode, so even that wouldn't work would it

426 sats \ 0 replies \ @saunter 21 Jan

Would zero-knowledge proofs somehow provide it?

282 sats \ 0 replies \ @TheBTCManual 21 Jan

Hmmm, I guess its up to the mint, maybe an API showing issues and redemptions backed by the multi-sig wallet funds/LN channels, gets complicated real fast though and isn't something that cannot be faked

So my guess is Bank run, is the best way to verify lol

61 sats \ 4 replies \ @rhombus 21 Jan

By not sending to the mint in the first place. Don't settle for Bitcoin derivatives.

0 sats \ 2 replies \ @cryptofolyo 21 Jan

fedimint provides a solution for general public for whom self custody may not be that easy a better way to buy and store bitcoin a federated system in between the centralised and the purely decentralised system. It will be the way forward till self custody is taught in primary schools.

0 sats \ 1 reply \ @rhombus 21 Jan

I really have to disagree. Fedimint is nothing more than a middleman selling rugs under the premise mentioned in your reply. They're a distraction. We can do better.

0 sats \ 0 replies \ @_b_o_n_e_s_ 22 Jan

and what is the better?

0 sats \ 0 replies \ @siggy47 OP 21 Jan

I tend to agree, but I want to be sure, since people who know more than me see value in it.