An idea of non-custodial P2P Exchange

[aysg76]

Traditionally there was no way for P2P exchanges like LocalBitcoins to allow p2p exchange without user making prior deposit on the site. But with the recent innovation of DeFi, it is now possible to trade bitcoin on ethereum blockchain as Wrapped Bitcoin (WBTC). Similar to Tether, WBTC is also an ethereum token which represents value of bitcoin in 1:1 ratio and the adequate reserve is held by BitGo on publicly verifiable addresses.

WBTC opens the gates of Smart Contracts integration. So exchanges can now develop a solution where users don't have to deposit their bitcoins on the site first. Rather they will send bitcoin to the smart contract. After that buyer will send the fiat money to the bank account of seller. In order to release WBTC to the ethereum address of buyer, both buyer and seller have to confirm that fiat money has been received by the seller. In the case, buyer confirmed 'yes' but seller confirmed 'no', a dispute will open and exchange will come into the picture. Exchange will verify the fiat transaction and cast 'yes' or 'no' accordingly. If there will be 2 'yes' and 1 'no', WBTC will be released to the buyer's address after deducting marginal fees of exchange, while on the contrary if there are 2 'no', it will be returned to the seller's address.

What is your thought on this guys? Is this solution better than the current P2P model?

[LeGaulois]

You're more or less describing how Bisq works but without the Wbtc and smart contracts.
What more can bring your idea of using smart contracts and Wbtc?

The difference is with Bisq there is a security deposit for the buyer and the seller to make sure they follow the trading protocol. The deposit is locked in multi-sig escrow and of course, returned back to the peers if everything went good.

If something goes wrong, a mediator takes a decision and sign the multi-signature address 2-on-3 for the benefit of the concerned person

Isn't it making it more difficult while there are solutions easier?

[logfiles]

What is your thought on this guys? Is this solution better than the current P2P model?

Have you used localcryptos before? The idea is pretty much the same but with real bitcoins and not wBTC
1. When you create an account, There is an option to download a back up of your generated wallet addresses linked to your account. So even if localcrpytos went offline, you scan still access your addresses by importing the private keys to another wallet

2. When you open up a trade, let's say you want to sell BTC, you have to first fund the escrow by actually sending BTC in an escrow address, You are even given an option to edit the transaction fee you would like to use. After 1 confirmation, the buyer is then given time to send fiat money to you after which you can release the BTC in the escrow to the buyer.

This is far better than what you are suggesting because one has to go through the hassle of buying wBTC in case they initially had BTC. AFAIK, most platforms that swap BTC for WBTC require one to first fulfil KYC verification which is a NO-go area for most traders who want to use noncustodial P2P exchanges.

[pooya87]

But with the recent innovation of DeFi, it is now possible to trade bitcoin on ethereum blockchain as Wrapped Bitcoin (WBTC).

that is not innovation, it is complication.
instead of depositing your bitcoin in a site you would be depositing your bitcoin in another centralized platform and receive a similar IOU in return that may or may not be tradeable back to real bitcoins.

Similar to Tether, WBTC is also an ethereum token which represents value of bitcoin in 1:1 ratio and the adequate reserve is held by BitGo on publicly verifiable addresses.

ans similar to Tether it means absolutely nothing because you are trusting the promise of a centralized company that could very well be shut down some day by the FBI similar to all the previous ones they shut down. hence your tokens would worth nothing.

What is your thought on this guys? Is this solution better than the current P2P model?

P2P exchange must never have any middle man and must always take place in a 100% direct manner. you give X and receive Y. if you are swapping X to Z then Z to M then to Y and go through a lot of hoops and take a lot of risks then it is no longer a P2P model.

even if we wanted to follow the model you are suggesting here, a much better solution which would also be a lot more decentralized would be a side-chain of bitcoin itself that handles the smart contracts not some other platform that is known to have a lot of issues and is mostly centralized (ie ethereum).