❓ Questions Regarding BTC Transfer and Price Imbalance on the Hacash Chain

[SadikSunbul]

Hello,

I have reviewed the Hacash project, and it has caught my attention. I am interested in contributing to the development of the project, but I have some questions in mind. Specifically, I would like to understand how certain technical and economic challenges related to the tokenization of BTC on Hacash L1 and the one-way bridge system will be addressed. Here are the two main issues I am considering, and I am curious about the project's proposed solutions:

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1. ⚖️ BTC Price Imbalance Issue

It has been stated that BTC transferred to the Hacash chain cannot be sent back to the Bitcoin chain. This situation could lead to a discrepancy between the BTC price on the Hacash chain and the real market price. For example:

• If the real market price of BTC is 100k, the price on the Hacash chain might remain at 90k due to insufficient liquidity.
• This would eliminate arbitrage opportunities (profiting from price differences) and could lead to liquidity issues.

❓ Question:
What mechanism is envisioned to ensure that the BTC price on the Hacash chain remains aligned with the real market price? Are there plans for liquidity providers or other solutions?

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2. 🌉 Centralized Exchanges (e.g., Binance) Acting as a Bridge

If a centralized exchange like Binance starts supporting the Hacash chain, the following scenario could arise:

• Binance could accept BTC on the Hacash chain and allow users to transfer these BTC to Binance.
• Binance could then send these BTC back to the Bitcoin chain, effectively acting as a bridge.
• In this case, BTC on the Hacash chain would indirectly return to the Bitcoin chain.

❓ Question:
In such a scenario, how will the return of BTC from the Hacash chain to the Bitcoin chain be prevented? Or does this situation conflict with the project’s vision?

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I’d appreciate it if you could provide some clarity on these points. Understanding these aspects will help me contribute more effectively to the project. Thank you in advance! 🙏

[hacashaddcit]

Hi, thanks for your interest in Hacash!

If you have not already, please visit these 2 links regarding BTC on Hacash:
hacash.org/btc - Vision
hacash.money/btc - Technical

Also, hacash.com focuses mainly on BTC 1 way transfer on L1, along with multichain apps on L3.

[SadikSunbul]

Thank you for the links you provided. However, I would like to clarify a few points:

For example, I can transfer my BTC on the Hacash network to Binance and perform trading operations there. However, when I attempt to transfer these BTC back to the BTC chain, the total amount of BTC on the Hacash network decreases, while the total amount of BTC on the BTC chain increases.

In this context, since BTC on the Hacash network is not exactly the same as BTC on the BTC chain, wouldn’t Binance need to create a separate trading pair for this? But wouldn’t such a situation go against the core vision of the project? Because it is claimed to be "the same as BTC," yet having a separate pair would create a price difference. Ultimately, these two assets would essentially behave as different coins.

[hacashaddcit]

My understanding is that BTC on the Hacash network would be the same value as BTC on the original mainnet, But not have the same ticker. It may be hBTC or something, I dont know. Good question for info@hacash.com.

Here is what I know/understand about Hacash, and I address the exchange question at the end:

BTC is not issued on Hacash without sending real BTC to the blackhole address. So it is the same asset that was mined with PoW, but living on the hacash chain rather than the original BTC chain. There is no way to get BTC on hacash without using real BTC. Same asset, different protocols. Kind of like sending dollars from your bank account to a paypal account I suppose. Your dollars left your bank account but have the same value on paypal. The difference is you can send your dollars back to your bank account from paypal. You cannot send your BTC back to the original BTC network from hacash as this would allow for exploitation of Hacash (explained at the end).

Sending BTC to hacash does carry the risk that the hacash-BTC becomes worthless if the hacash chain does not gain traction. This is why early BTC transfers are so generously rewarded with HAC Coins when they make a transfer. As more people transfer BTC to Hacash, the risk of doing so decreases with each transfer, and the HAC risk-reward decreases linearly, until at some point (after 1 roughly 1 million BTC transferred) the risk-reward becomes 1 HAC per 1 BTC. At this point, BTC on Hacash has been 100% accepted and there is no risk. So it is a system leveraging game theory.

HACD (block diamonds) are an attractive asset for many reasons
see:
-https://hacashtalk.com/t/why-is-hacd-an-encrypted-asset-which-is-more-scarce-suitable-for-wealth-storage-than-btc/65
-https://hacash.org/hacd

In order to mint HACD there are 2 steps, mining and bidding. After a HACD is mined, there is an auction paid in HAC, The highest bidder wins the HACD and the bided HAC is burned. So as long as there is demand for HACD, there is a demand for HAC.
Once HAC mining reaches a certain level of difficulty, it may make more economical sense to obtain HAC for HACD bidding via the risk-reward from a BTC transfer than to continue to mine it. This would be incentive for HACD miners to send BTC to explorer.hacash.org so they can reap the HAC risk-reward for doing so (then they have plenty of HAC to use for HACD bidding).

As for the exchange scenario you pointed out, that is a great question. I imagine the exchange would need to have a separate coin for Btc on Hacash (like hBTC, or HAC-BTC).

If you could send Hacash-BTC (lets call it HAC-BTC) to an exchange like Binance and withdraw it to the original BTC chain, then that breaks the rules of the 1 way transfer. In this scenario, people could game the Hacash system by:
-sending their BTC to explorer.hacash.org
-reap the HAC risk-reward for the BTC transfer
-then send their HAC-BTC to Binance
-withdraw it to the original BTC network
-use the same BTC to send to Hacash chain again and get another HAC risk-reward with the same BTC (rinse/repeat)

I hope this answers your question. Feel free to join the Telegram group if you have not already: https://t.me/hacash

[YouKenTrust]

Hello,

I have reviewed the Hacash project, and it has caught my attention. I am interested in contributing to the development of the project, but I have some questions in mind. Specifically, I would like to understand how certain technical and economic challenges related to the tokenization of BTC on Hacash L1 and the one-way bridge system will be addressed. Here are the two main issues I am considering, and I am curious about the project's proposed solutions:

1. ⚖️ BTC Price Imbalance Issue

It has been stated that BTC transferred to the Hacash chain cannot be sent back to the Bitcoin chain. This situation could lead to a discrepancy between the BTC price on the Hacash chain and the real market price. For example:

• If the real market price of BTC is 100k, the price on the Hacash chain might remain at 90k due to insufficient liquidity.
• This would eliminate arbitrage opportunities (profiting from price differences) and could lead to liquidity issues.

❓ Question: What mechanism is envisioned to ensure that the BTC price on the Hacash chain remains aligned with the real market price? Are there plans for liquidity providers or other solutions?

2. 🌉 Centralized Exchanges (e.g., Binance) Acting as a Bridge

If a centralized exchange like Binance starts supporting the Hacash chain, the following scenario could arise:

• Binance could accept BTC on the Hacash chain and allow users to transfer these BTC to Binance.
• Binance could then send these BTC back to the Bitcoin chain, effectively acting as a bridge.
• In this case, BTC on the Hacash chain would indirectly return to the Bitcoin chain.

❓ Question: In such a scenario, how will the return of BTC from the Hacash chain to the Bitcoin chain be prevented? Or does this situation conflict with the project’s vision?

I’d appreciate it if you could provide some clarity on these points. Understanding these aspects will help me contribute more effectively to the project. Thank you in advance! 🙏

For the first question, both Bitcoin's BTC and Hacash's BTC are free markets, and price highs and lows cannot be judged in advance. Regarding liquidity, the free market can give various solutions.

For the second question, the one-way transfer of BTC means that the BTC in Bitcoin's mainnet exists only in the black hole address, and Binance is not technically able to implement bridging, and no one else can.

[SadikSunbul]

If the price of BTC on Hacash does not match the price of real BTC, no one will send their BTC to the Hacash network. This situation seems similar to the Warped token system. However, in the Warped system, when you deposit your BTC, you can withdraw it at any time. This flexibility ensures that the prices in the Warped system remain very close to each other. In Hacash, however, the system is one-way, meaning you can only deposit BTC. This limitation will likely result in a significant price difference between Hacash BTC and real BTC.

How did they plan to solve this?

[YouKenTrust]

Why should it match? And it's possible that Hacash's BTC price will be higher than Bitcoin BTC price. You seem to think that transferring BTC from Bitcoin to Hacash in one direction will only happen because both have the same previous BTC price?

[SadikSunbul]

It is very unlikely for the price of BTC on the Hacash chain to be higher than that of real BTC. For example, if real BTC is priced at 100k and BTC on the Hacash network is priced at 150k, I could use all my available funds to buy real BTC, transfer it to the Hacash network, and sell it there. Then, I could withdraw the USD from Hacash and repeat the same process. This way, I would effectively equalize the price of BTC on Hacash with the real BTC price. However, in the opposite scenario—where the price of BTC on Hacash is lower than real BTC—it would be much harder for Hacash's BTC price to catch up to the real BTC price, since you cannot withdraw BTC from the Hacash network.

[SadikSunbul]

If the price of BTC on Hacash is not equal to or higher than the real BTC price, why would I transfer my BTC and take a loss?

[hacashaddcit]

If the price of BTC on Hacash is not equal to or higher than the real BTC price, why would I transfer my BTC and take a loss?

HAC and/OR HACD could have a higher price than BTC in the future. After roughly 1 mil BTC is transferred to hacash, the HAC risk-reward for the BTC transfer is just 1 HAC per 1 BTC transfer. At this time, 1 HAC is worth more or equal to 1 BTC.

Also worth noting, the 1st BTC 1 way transfer will receive a HAC risk-reward of 1,048,576 HAC. Even at current HAC price of around $1.50, this would be worth more than 1 BTC (1,048,576 HAC x $1.50 = $1,572,864). So if someone sends BTC to hacash chain today (they cant, still in test net, but just giving example) then they are trading the price of 1 BTC (around $100K) for the price of 1,048,576 HAC (around $1.5 mil). They can then uses this HAC to bid on and mint block diamonds (HACD). So it is all game theory and free market.

And I said they are "trading" the price of 1 BTC for the price of 1,048,576 HAC, but it is not really a trade, because they still own their BTC too, Only now, it is on the upgraded protocol, explorer.hacash.org