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25 sats \ 3 replies \ @Murch 17 Feb \ parent \ on: Is Self Custodial Bitcoin Possible Outside of the Main Chain? bitcoin
Isn't the lock time though synonymous with the amount of time that the ASP has to lock up their own funds in parallel for the unilateral exit from the Ark? I.e. longer locking would mean that the ASP has to have way more capital
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0 sats \ 2 replies \ @toyota_corolla0 17 Feb
The ASP needs extra funds starting from the redemption of a VTXO till when the ASP is able to sweep the UTXO. The ASP could charge a VTXO redemption fee equal to VTXO amount * some ASP decided interest rate * time till ASP has ability to sweep UTXO.
Basically users of the ASP would have to pay interest on the capital that the ASP has to lock up because of the user.
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25 sats \ 1 reply \ @Murch 17 Feb
So holding in an ASP would incur a fee relative to the amount held there, slowly bleeding away your holdings. That seems at adds with wanting to hold a lot of funds for a long period.
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0 sats \ 0 replies \ @toyota_corolla0 17 Feb
Though the fee is also relative to how long the ASP has to provide captial for your VTXO.
For example, if the ASP provided an ARK with a 1 year sweep time, a user planning to self custody their funds for at least a year would join the tree, wait till maybe two weeks till ASP can sweep, then redeem to a new tree. This way they would only pay interest for 2 weeks of time.
Its important to note that all the users participating in these ARKs would be doing so because they believe the net fees they would have to pay to be in the ARK would still be cheaper than standard self-custody through an onchain transaction fee. This would likely only be true for small-medium amounts so its unlikely any very large amounts would ever participate in these ARKs.
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