Why do bank robbers rob banks? Because that's where the money is.
Why do hackers hack bridges? Because thats where the native assets are.
When Khal @khaleelkazi announced the LEODEX he was excited and he stated that he had learned from all his previous mistakes creating projects bridging from Hive to other blockchains like Ethereum, Binance Smart Chain and Polygon.
And quite frankly I didn't get it. I trust Khal and know he is imparting knowledge and alpha on me, but sometimes I don't understand what he says, when he first says it.
I need to listen to the words, think about what they mean, and then do some more research and finally use the thing he has created, and then I appreciate what he is saying.
So when he announced the new revised LEODEX , and said that we would be able to trade Hive directly for Bitcoin, I wasn't sure how he was going to do this, and how he was going to avoid the mistakes of the past. He said many things and I needed to put all these ideas together in my head to figure it all out.
Bridge Hacks, wrap hacks, banks, honeypots and not attracting hackers and scammers.
The basic premise of cryptocurrency, your assets , in your wallet, protected by your private keys. The inherent theoretic value of swaps, wallet to wallet, peer to peer transfers, means your crypto stays in your wallet, until you swap it for other native assets and those assets transfer to your wallets.
This is also the basic reason why wraps and bridges are so dangerous. Assets from one blockchain are swapped for assets which represent their value on another blockchain. And the original native assets are held on a bridge until the investors swaps back for them.
Example you swap Bitcoin for wrapped Bitcoin on Ethereum and the swap service holds your Bitcoin in a wallet, frequently connected to the bridge via smart contracts, and this big wallet full of Bitcoin, which is just sitting there while your Bitcoin is invested on Ethereum, making you money. This wallet full of Bitcoin is the Honeypot which attracts hackers, just like bank robbers, are attracted to banks.
Now while the people who wrap Bitcoin have a very good safety record, many other wrapping services and bridges don;t have a similar impressive record. In the last two years over 400 million dollars was stolen from bridges and our own Leofinance experiences bridge hacks when we first bridged to Ethereum and once again when we bridged HBD to BInance Smart Chain.
Many smart people have tried to make bridges safe, but honeypots, just like banks, have infinite allure to those who want to hack them. The larger the reward the more sophisticated and smarter the hackers you attract.
The solution is to construct structures which allow people's crypto to stay in their wallets, protected by their keys as long as possible. And this is the value proposition for Thorchain, your assets remain in your wallet, and instead of wraps their is a common token, like Rune on Thorswap, abd Cacao token on Cacaoswap. These tokens eliminate the Honeypot and allow cross blockchain swaps on open exchanges called DEXS. This is what LEODEX is a cryptocurrency exchange which allows your crypto to stay safely in your wallet until the exchange takes place. So while LEODEX currently uses a wrapped token on arbitrum as a wrapped intermediary, it is designed to be a momentary wrap, you go to LEODEX input your Hive for Bitcoin, the wraps and swaps take place in the background and your Hive doesn't spend days, weeks or months sitting in a hack susceptible wallet, acting as a honeypot attracting bright, resourceful hackers. It is there for moments during the trade, and then new native assets are safely in your wallet, protected by your private keys.
Example you trade Hive for Bitcoin. Your Hive is traded for Leo, then Leo traded for Arbitrum leo, then Arbitrum Leo traded for Cacao, then Cacao traded for Bitcoin, and then the Bitcoin is deposited in your Bitcoin wallet. So your Hive stayed in your wallet, protected by your keys, until it was time to trade it and this takes a few minutes and then you have native Bitcoin safely deposited into your bitcoin wallet, protected by your keys.
Khal has learned from all the projects he built over the last five years from Steemleo to Leofinance, wleo, bleo, pleo, bHBD, bHive, Cubfinance and POlyCub. The practice of holding native assets while people use wrapped tokens for long termed term trades on another blockchain is a honey pot creating, hacker atracting model fraught with risk. People rob banks because that's where the money is, and People hack bridges because that's where the native assets are.
But using wrapped tokens as intermediaries in native asset swaps doesn't create a honey pot, as the wraps are only used for intermediaries in the trade and then the investor gets native assets again, safe in their wallet.
No honeypot, no hacks.
Thats the beauty of LEODEX and that's the amazing thing about being able to trade Hive for Bitcoin in a single click.
- Many will look at the Arbetrum Leo token and think, are we really getting away from wrapped tokens? This looks like a wrapped token.
- Well now you have the explanation, from my perspective and understanding why this time it's different.
- And the beauty of this, is that arbetrum may be an intermediary step for us. If Hive becomes a big enough customer, Maya may decide to create the rails or infrastructure to list Hive directly on Cacaoswap, and then we won't need an arbitrum token, we will be able to list Hive-cacao directly on Cacaoswap.
- I think this is exciting, amazing and big steps forward. I hope you agree.
I also hope you come join us providing liquidity on cacaoswap, earn some trading fees and help build our presence on on Maya to increase awareness of our blockchain Hive and our greater community on Hive. We are over a million accounts here, we just need to act together to leverage our size for all our benefit.
@shortsegments
