Main Attack Vector for Hive: Centralized Liquidity

I write this post under the impression of listening to the latest Chain Chatter Podcast with TheyCallMeDan, YabapMatt, and Khal.

If you haven't seen it, it's worth watching/listening to the recording:

There are multiple points one can drive home after this roundtable, but right now I want to focus on one topic that was brought up by TheyCallMeDan after Matt had to go.

And that is the major issue Hive has with centralized liquidity and which constitutes the main attack vector on Hive.

The problem became obvious after hardfork 26 when the exchange with the highest transaction volume for HIVE (Binance) disabled deposits and withdrawals (that's normal), but they remained like that for a very long time. I'm not sure if they are up right now, I haven't checked because I rarely use Binance these days.

Many were affected by this, not being able to either buy HIVE or sell it via the route they were accustomed to, and one of the few ones available, when we talk about centralized exchanges.

Even Splinterlands was affected - if I'm not mistaken - in the process of selling GLG packs. I didn't follow the matter closely, because I wasn't interested in buying GLG packs, but I saw at some point an announcement in their discord that they had to temporarily allow purchases with other cryptocurrencies, where initially only purchases with HIVE were permitted (if my recollection of the announcement is exact).

Having solid onramps and offramps is critical for the future of any crypto project. Even more, for an entire ecosystem.

TheyCallMeDan proposed that we should make it a priority to have a true DEX on our base layer, to eliminate this attack vector. Khal rallied behind this idea also.

Some people could say we already have a DEX, and we can trade HIVE for HBD and vice versa.

That is true, and it is a great thing that we have it.

What the internal market doesn't offer us is exactly what's missing from that name: external routes. A way to onramp and offramp from the Hive ecosystem in a decentralized, unattackable manner.

I definitely see a need for a true DEX on the base layer of Hive.

But I believe one of the holdbacks that need to be overcome is the oracles.

Who will play the role of the oracles in the decentralized setup? Do witnesses want this responsibility? Not all witnesses provide a price feed for HIVE or not often enough. What will happen if more coins would need a price feed for our DEX?

There is the option to use external oracles. But if they aren't truly decentralized and reliable, they can become the target or the source of an attack themselves. So, we would trade one potential problem for another.

Posted Using LeoFinance ^Beta