
The Rainbow Network: An Off-Chain Decentralized Synthetics Exchange [pdf] - bpierre
https://rainbownet.work/RainbowNetwork.pdf
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homakov
This "synthetic" balance does closely remind me of "uninsured" balance I
proposed for XLN (Lightning, extended with credit lines to solve capacity
problem)
[https://github.com/fairlayer/wiki/blob/master/04_four_balanc...](https://github.com/fairlayer/wiki/blob/master/04_four_balances.md)

The difference is synthetic balance is offered to be enforced from the
collateral from the escrow. In XLN I proposed to try to enforce it by taking
it from the other party's onchain balance.

Both options would work together even better ("synergy" haha)! From the first
example:

1\. blockchain dispute resolution code tries to take USDC from Alice's onchain
balance (since Alice owes 750 to Bob).

2\. if Alice still owes something, try to convert any other Alice's onchain
balance into USDC using oracles, then return to Bob.

PS. will finish reading the paper sometime soon, so not sure if got it wrong.

Overall, happy to see new solutions coming to payment channels that _do not_
imply full collateralization (via cross-asset synthetic collateralization as
in here). Full prepaid collateral is stupid and limiting the growth.

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hrdwdmrbl
Sounds cool. At the end of the day, someone will probably built it and deploy
it and we'll get to see it succeed or fail. Very interesting time to be alive.
A lot of good science going on. I think we will look back at this time as a
fairly golden age in whatever we eventually call this (decentralized finance,
or is that just one angle?). This will be the case regardless of what succeeds
or fails. Really an industry you can make advances in.

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lopatin
Upvoted because I'm pretty sure this comment was written by a neural net and
I'm hoping for a reply.

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aakilfernandes
A neural network trained on HN comments would probably give a scathing
critique of a tangentially related project.

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GenericsMotors
> 3.8 Risk of undercollateralization

> In Example C, if the price of ETH falls by 50%, Alice’s balance in the
> channel is effectively worth nothing. If the price of ETH falls further than
> that,the channel would become undercollateralized—Bob would no longer be
> able to withdraw his USD at its current value.

This can and will happen in the real world, and seeing how the "crypto-sphere"
is teeming with scammers running pump-and-dumps, and exchanges manipulating
prices, it's pretty much guaranteed.

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hrdwdmrbl
Let's restrict the discussion to the top 10 cryptoassets. All of those would
be pretty hard to manipulate in to a price decrease of 50% considering how
much money you'd have to spend. So it seems like this concern is really only a
function of how volatile or risky the asset is. And as for price manipulation,
any exchange doing that is not going to be a top-10 exchange either.

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GenericsMotors
There's some strong research to support Tether being used to manipulate
Bitcoin's value, and Tether's site was recently updated to clarify that it is
in fact _not_ backed 100% by USD.

Both of these are top 10 crypto assets...

Not to mention MtGox manipulated prices during the 2013 bullrun.

You're trying to paint this as some sort of hypothetical scenario when this
has already happened! And will happen again if this "rainbow network" gains
any significant traction.

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wslh
tldr; does this add a breakthrough or is it just a variation of a consensus +
payment channels solution?

