Stable coin on BTC main chain

[Sonkar44444]

Hi team,
Wanted to check if we can mint stable coin on the BTC main chain, since it allows smart contract facility (although not sure how complex). Speed and transaction fees are not concerns at the moment. We are exploring to leverage the BTC main chain directly for creating our own security token. Not sure if this is possible. If yes how and if now why? Can anybody kindly help? I will be extremely grateful.
What is the best smart contract language for the BTC main chain?

[TryNinja]

Well, USDT (Tether) started as a colored token on the Omni layer, which is built on top of the Bitcoin blockchain. But doing it is not as easy as deploying an ERC20 smartcontract on Ethereum or one of its fork chains (Fanthom, Avax, BSC, etc...).

Start here, maybe: https://en.bitcoin.it/wiki/Colored_Coins

[bitmover]

You can see here that there are still around 1 billion USDT in circulation in Omni Layer (BTC blockchain)

https://tether.to/en/transparency

On Omni

Total Authorized

$1,335,000,000.00

Less: Authorized but not issued

-$443,260,601.03

Less: Quarantined USD₮

-$32,303,805.00

You can navigate in omni explorer to see other tokens as well, but most transactions are USDT related. The volume is low, a few thousand dollars per block.
https://omniexplorer.info/

[garlonicon]

Wanted to check if we can mint stable coin on the BTC main chain

Yes, of course. It is a federation, so all that is needed is creating a signet sidechain and connecting that with Bitcoin. Because mining is centralized (because fiat currencies are also centralized), then you can handle deposits and withdrawals, just by moving bitcoins.

So:

1) Any user can deposit BTC and receive your stablecoin, just by including Bitcoin inputs in your batched sidechain deposit (and signing that after batching).
2) Any user can withdraw stablecoin and receive BTC. You simply do that in reverse, you collect all sidechain signatures in batches, verify them, and sign one Bitcoin transaction that will deposit some sidechain coins to many users.

To make things stable, you can communicate with the mainchain for example every three months (as proposed in Drivechains) and handle batched deposits and withdrawals in one huge transaction, that is first batched, then signed and broadcasted. Also, because it is a federation, it can work in any possible way, there are no limits and you can do it now, without any consensus changes.

[dkbit98]

Hi team

There is no ''team'' here, only forum members and geeks.

Wanted to check if we can mint stable coin on the BTC main chain, since it allows smart contract facility (although not sure how complex). Speed and transaction fees are not concerns at the moment. We are exploring to leverage the BTC main chain directly for creating our own security token. Not sure if this is possible.

Only way you can do this is by using other layers on top of Bitcoin, omni layer, sidechains, drivechains or something similar.
Problem for all off this is there is not enough liquidity and popularity, maybe most active is Liquid chain that uses stable coin Tether and L-BTC made by BLockstream.
You can find other alternative like Mintlayer, RSK, etc on Jameson Lopp website Bitcoin resources:
https://www.lopp.net/bitcoin-information/other-layers.html

What is the best smart contract language for the BTC main chain?

It's impossible to use any stable coins on Bitcoinmain chain, and this will not change in future unless some major hard fork happens (unlikely to ever happen).

[garlonicon]

It's impossible to use any stable coins on Bitcoinmain chain

Why not? You deposit coins by sending them to stablecoin sidechain address. Then, the sidechain creators can control it fully, so for example people deposited 1 BTC, stablecoin printed 1000 coins, so 1 BTC = 1000 ALT. Then, stablecoin owners can create coins out of thin air and reach for example 1 BTC = 1000000 ALT, because they can simply print 999000 ALT. Then, they can burn 999999 ALT and reach 1 BTC = 1 ALT. By burning and printing they can reach any exchange ratio and match exchange rate, for example the same as in US dollars. On the other side, people depositing and withdrawing coins will decide, how many BTC will be in this sidechain.

Sidechains can have any rules that their creators want to implement. And federations can be pegged right here, right now, without any change in consensus (stablecoins are federations, because they have centralized mining, similar to for example how dollar printing is centralized). Also, the address of the sidechain can be public and contain some hidden commitment to the latest sidechain hash, used during making on-chain batched transaction. All implementation details can be public, only private keys have to remain hidden.

Problem for all off this is there is not enough liquidity and popularity

This is completely different problem, related to things like trust in stablecoins at all, trust in federations at all, things like that. Technically, there is no problem to implement stablecoin on Bitcoin here and now, with no consensus changes. Anyway, in practice that would be just a batching of transactions that would otherwise be made between users and exchanges, stablecoin creators can include that directly in the protocol to batch them in official way and make it a part of their consensus.

[dkbit98]

Why not? You deposit coins by sending them to stablecoin sidechain address.

Because mainchain is not the same thing as sidechain and even the name is telling you that.
Sidechains can have numerous bugs and issues unrelated to bitcoin that can result in losing value of stable coins that are not stable anyway with non-stop inflation and printing of fiat currencies.
If you don't have any liquidity in your sidechain than it doesn't really matter what you do there, or what stable stuff you have.
 

[d5000]

Why not? You deposit coins by sending them to stablecoin sidechain address.

Because mainchain is not the same thing as sidechain and even the name is telling you that.
Sidechains can have numerous bugs and issues unrelated to bitcoin that can result in losing value of stable coins that are not stable anyway with non-stop inflation and printing of fiat currencies.

At least Omni Layer is not a sidechain. It is a software layer for the mainchain, i.e. it uses OP_RETURN main chain transactions to transfer "coloured coins" which can be any type of tokens, from securities up to centralized stablecoins (like Tether). Basically an Omni client is an extension to a Bitcoin client which is capable to read and validate this data, but it doesn't build a "sidechain", like Liquid/Drivechain do.

Of course that layer can have bugs, but it's unlikely at this point (Omni exists since 2013 or 2014) that these are concerning for the main operations (issuing, sending and receiving tokens).

However an algorithmic stablecoin should be more difficult to build on the Bitcoin chain, although I don't rule it out completely that it's possible (maybe with Counterparty, see below). It would need probably a turing complete script language.

What is the best smart contract language for the BTC main chain?

Basically the Bitcoin "core" protocol supports only Bitcoin Script, which is not Turing complete, but there are possible simplifications and variations of it, like Simplicity (which is still not supported though). The "layers" which extend Bitcoin with OP_RETURN transactions can have more elaborate smart contract languages, although these can not handle Bitcoins, only their tokens (so a smart contract can't "hold" Bitcoins as collateral, for example). For this reason, most of these layers have an own helper currency for some basic operations. Counterparty had once a project to create a Turing complete smart contract language compatible with Solidity (Ethereum's main smart contract language), but they're not very active currently and I don't know if they succeeded (Edit: according to this page, it seems they have abandoned the project, or are working on an alternative).

[Sonkar44444]

Why not? You deposit coins by sending them to stablecoin sidechain address.

Because mainchain is not the same thing as sidechain and even the name is telling you that.
Sidechains can have numerous bugs and issues unrelated to bitcoin that can result in losing value of stable coins that are not stable anyway with non-stop inflation and printing of fiat currencies.

At least Omni Layer is not a sidechain. It is a software layer for the mainchain, i.e. it uses OP_RETURN main chain transactions to transfer "coloured coins" which can be any type of tokens, from securities up to centralized stablecoins (like Tether). Basically an Omni client is an extension to a Bitcoin client which is capable to read and validate this data, but it doesn't build a "sidechain", like Liquid/Drivechain do.

Of course that layer can have bugs, but it's unlikely at this point (Omni exists since 2013 or 2014) that these are concerning for the main operations (issuing, sending and receiving tokens).

Thank you for sharing this information. Can we use Open Asset Protocol to achieve this? Is it still in use? Transaction time & speed are not the concern at the moment.

However an algorithmic stablecoin should be more difficult to build on the Bitcoin chain, although I don't rule it out completely that it's possible (maybe with Counterparty, see below). It would need probably a turing complete script language.

What is the best smart contract language for the BTC main chain?

Basically the Bitcoin "core" protocol supports only Bitcoin Script, which is not Turing complete, but there are possible simplifications and variations of it, like Simplicity (which is still not supported though). The "layers" which extend Bitcoin with OP_RETURN transactions can have more elaborate smart contract languages, although these can not handle Bitcoins, only their tokens (so a smart contract can't "hold" Bitcoins as collateral, for example). For this reason, most of these layers have an own helper currency for some basic operations. Counterparty had once a project to create a Turing complete smart contract language compatible with Solidity (Ethereum's main smart contract language), but they're not very active currently and I don't know if they succeeded (Edit: according to this page, it seems they have abandoned the project, or are working on an alternative).

[dkbit98]

At least Omni Layer is not a sidechain. It is a software layer for the mainchain, i.e. it uses OP_RETURN main chain transactions to transfer "coloured coins" which can be any type of tokens, from securities up to centralized stablecoins (like Tether).

Yeah, but he was clearly talking about sidechains so I had to reply to him about that.
As for Omni Layer for Bitcoin, it never got any real traction and I checked statistics from omni explorer showing there are only 335 transactions in last 24h.
We can better understand when we compare that with Bitcoin mainchain that had over 251,654 transactions in last 24h.
I am not sure what percentage of Tether stable coin is on Omni Layer but I am sure it's much less than on all other shitcoin chains.

[pooya87]

As for Omni Layer for Bitcoin, it never got any real traction and I checked statistics from omni explorer showing there are only 335 transactions in last 24h.

I would't say never. Initially when it was introduced and coins like Tether were created and only existed on bitcoin chain, it had a good traction. Then token chains came along and it got duplicated on those chains too, so the Omni transactions were mostly transferred to those chains.
Since the main usage of such tokens is among exchanges and they charge a much smaller fee on alt-chains people migrated to those. For example IIRC Binance charges 10 USDT if you choose bitcoin chain and charges something like 0.1 if you use BinanceChain (since it is centralized they also don't need that many confirmation so the transfer is very fast too).

[dkbit98]

I would't say never. Initially when it was introduced and coins like Tether were created and only existed on bitcoin chain, it had a good traction.

When I say real traction, I mean for regular people, not exchnages.
I never used Omni layer for anything including for stable coins like USDT, and I don't know anyone else who did that.
For comparison, I know a lot of people who used stable coins on other chains.

Since the main usage of such tokens is among exchanges and they charge a much smaller fee on alt-chains people migrated to those. For example IIRC Binance charges 10 USDT if you choose bitcoin chain and charges something like 0.1 if you use BinanceChain (since it is centralized they also don't need that many confirmation so the transfer is very fast too).

I think that some exchanges are now using Liquid second layer made by Blockstream for that purpose, however I am not a fan of their federated network and tokens.
They have L-BTC on Liquid network with around 3,522 circulating, and Tether USDt with around 36,561,000 in circulation.

[BlackHatCoiner]

For example IIRC Binance charges 10 USDT if you choose bitcoin chain and charges something like 0.1 if you use BinanceChain (since it is centralized they also don't need that many confirmation so the transfer is very fast too).

Not only for centralization, if you allow me. It's clearly for their benefits. They want you to stop using BTC/ALTs as this would push you onto their shit-chain. Therefore, the shit-chain's demand increases.

Also, I'm not quite sure, but they either charge large amounts so it can be confirmed instantly or you pay both Binance and the miners each time you make a transaction.

[d5000]

As for Omni Layer for Bitcoin, it never got any real traction and I checked statistics from omni explorer showing there are only 335 transactions in last 24h.

Yep, the main problem of Bitcoin-based tokens is the transaction fee, like pooya87 already wrote. However, Omni and also Counterparty are/were working on implementations for Lightning. You would then be able to open a LN channel for your token, and transactions would be very cheap again. I guess this would make it attractive again to use the Bitcoin chain for tokens and stablecoins.

In the case of Omni it's OmniBOLT, it seems to be already functional (github is here and seems to be active, although I don't know how mature it is). I'm not sure if Counterparty is still working on it, it has some info here about an implementation proposal called picopayments, but there are no commits for several years now so it seems abandoned.

@Sonkar44444: Something seems to have gone wrong with your answer, it contains only the quote of my post.

[PrimeNumber7]

At least Omni Layer is not a sidechain. It is a software layer for the mainchain, i.e. it uses OP_RETURN main chain transactions to transfer "coloured coins" which can be any type of tokens, from securities up to centralized stablecoins (like Tether).

Yeah, but he was clearly talking about sidechains so I had to reply to him about that.
As for Omni Layer for Bitcoin, it never got any real traction and I checked statistics from omni explorer showing there are only 335 transactions in last 24h.
We can better understand when we compare that with Bitcoin mainchain that had over 251,654 transactions in last 24h.
I am not sure what percentage of Tether stable coin is on Omni Layer but I am sure it's much less than on all other shitcoin chains.

Bitcoin transactions are fairly expensive to get confirmed when compared to other chains that USDT is issued on. In order to transfer USDT that is issued via the omni layer of bitcoin, you must have a bitcoin transaction get confirmed. Originally, USDT was only issued via the Omni layer, and there were more USDT transactions via bitcoin.

To answer, the OP's question, yes it is possible to issue a stablecoin-like product via bitcoin. This is being said while taking into consideration the fact that the OP explicitly said that time and cost are not issues he wants to take into consideration.