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quoting naddr1qv…3h2c

You can think about it as a crossbreed between Smart Contracts (DLCs) & Lightning Channels 👀

Let's see what it means for the user

On a previous thread, we explained that #Bitcoin DOES handle Smart Contracts, called DLCs (Discreet Log Contracts).

On 10101 app, we use a very special kind of DLC protocol, codenamed DLC Channels. The user opens a channel with our coordinator, whose role is similar to that of an LSP on Lightning, but to match trade orders in our case. https://image.nostr.build/29988a686cf15eb302d1ecf4a6cbff645ead53875a8c420009a2d7e047f301c5.jpg

When a user launches the app and opens a trade for the first time, he or she is prompted to open a DLC channel with the coordinator.

ℹ️ His side of the channel can then be compared to his "trading account" on a classic centralized exchange https://image.nostr.build/07d54c75d3cc823393f04bf0d0550200e65c60bdd64110170f89b5fc109de36a.jpg

Once open, users can make a virtually infinite number of trades, with no on-chain footprint and no on-chain costs

The main difference with traditional DLCs is that contracts and their outcomes are kept off-chain

What changes is the distribution of capital within the channel ⚖️ https://i.pinimg.com/originals/f1/72/53/f1725365d0ce141133f558119be9a4cf.gif

While the user Channel Reserve is comparable to a trading account on an exchange, it is not totally identical:

E.G. if you're doing too good, your earnings expectancy is capped by the other side of the channel, and inbound liquidity will limit the size of your positions

If you're doing bad, your earnings expectancy are good, but your outbound liquidity will limit the size of your positions

ℹ️ An unbalanced channel is not desirable, and you will need to open a new channel to keep trading with ease.

Self-custodial and trustless trading comes with a cost, and tradeoffs!

But we're working to make the experience better. In the future, you will be able to top up your side of the channel with 1 transaction, or request for more liquidity on the other side of the channel!

Should we keep the name DLC Channels? Or should we call it Trading Channels in the app? Trading accounts?

let us know in the comments!

Best way to wrap your head around it? 📲 Try it for yourself! https://10101.finance/

BY THE WAY! 🎁 We charge NO fees for trading #Bitcoin perpetuals up to halving, and we share half the cost of opening a channel with you!

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Get10101 on Nostr: ...

Self-custodial and trustless trading comes with a cost, and tradeoffs!