Questions about Incognito tech

Hello, I am working on a blog post about different two-way bitcoin peg mechanisms. I have some questions that I have not been able to find answers for. Perhaps someone in the community here who is more knowledgeable than I am can help?

  1. Custodians are required to be bonded, and if their collateral dips below a certain value then the bond is liquidated.

Who runs the oracle that is used to determine the collateral value, what is the incentive for this oracle to report correct values, and how often does the oracle report values to the Bond contract?

  1. Custodian must deposit 150% of the value that they take custody of into the Bond contract in ETH or ERC-20 tokens.

Who determines what the accepted collateral types are? How is this person/entity selected?

  1. On the topic of pCoin redemption, I found a blog post that says it takes at most 12 hours to redeem a pCoin for a public coin.

Redeeming a pCoin is pretty straightforward. The user initiates a redeem transaction, which burns the pCoin and instructs the custodian to send the public coin back to the user by a deadline. The deadline is initially set at 12 hours from the time the redeem transaction is initiated .

https://blog.incognito.org/portal-privacy-for-every-cryptocurrency/

However that seems like a worst case scenario. What is the best-case scenario redemption time for a pBTC redemption? i.e. if I submit a transaction to turn pBTC back into mainchain BTC, what is the normal amount of time (in block time or human time) that I should expect this transaction to take to complete?

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Hey @light, thanks for your very good questions, please have a look at the answers below and let me know if you have any further questions.

Who runs the oracle that is used to determine the collateral value, what is the incentive for this oracle to report correct values, and how often does the oracle report values to the Bond contract?

Currently, the oracle price feed is still being run by the core team. As you can see, this is an extremely important component and but to design an oracle in a full decentralized fashion is not that easy, isn’t this? Especially incentivization for honest price feed like you said. We’re still working on the design for this. For now, it’s still controlled by the core team and prices would be reported every 30 seconds.

Who determines what the accepted collateral types are? How is this person/entity selected?

Only PRV (Incognito’s native token) is accepted as collateral for the current version. This is ruled in the protocol (code). We’ll be working on the next version that will accept ETH as well.

However, that seems like a worst-case scenario. What is the best-case scenario redemption time for a pBTC redemption? i.e. if I submit a transaction to turn pBTC back into mainchain BTC, what is the normal amount of time (in block time or human time) that I should expect this transaction to take to complete?

When you submit a transaction to burn pBTC for redemption, it would take a maximum of 5 minutes for Incognito chain to determine which custodians need to return BTC for the redemption. If the selected custodians send BTC to your wallet immediately then it would take around 10 minutes more for the transaction to get confirmed on Bitcoin network. So it would take around 15 minutes for the whole process in a normal scenario. By the way, we’ll be working on the client tool to help users as well as custodians to automate these processes. I guess this will be released in a few months.

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Hey @duc these were very helpful answers to my questions, thank you. I’ll follow up when my blog post is published in case folks here are interested in reading. Cheers!

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Another question if I may. In the Trustless Custodian post it says:

In the event of auto-liquidation due to the collateral value being too low, where does the collateral go once it is liquidated?

hi @light, when auto-liquidation happens, the collateral (PRV) would be still locked on Incognito chain and it would be available for users to withdraw by burning their pToken (i.e. pBTC or pBNB)

I thought collateral is held in a bond smart contract on Ethereum, not on the Incognito chain? Is the bond contract actually implemented only on the Incognito chain right now?

Again quoting from the Trustless Custodians post:

hi @light. Yes the bond contract is just implemented on Incognito chain for the current version. As you can see it’s only accept PRV (Incognito’s native utility token) as collateral for now.

However, we also have plan to work on Ethereum bond contract that will accept Ether as collateral in the next iteration. You can find the details at Incognito's trustless bridge V3 with Ethereum bond contract.

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