Topic: [Campaign] Dero: CryptoNote Privacy with Smart Contracts (Read 1230 times)

Can fractional reserve lending be implemented on the blockchain?  I am not sure, but it seems like something worth thinking about.  If it can, does Dero offer any advantages over other blockchains?  Yes, because of the privacy aspect and because of the sophistication of the planned smart contracting.

Fractional reserve lending means that a wallet holder could loan another wallet holder more than they hold in "reserve" against the loan.  If Alice agrees to lend Bob 10 Dero and the protocol requires 1/10 of this to be held in reserve (the amount normally required in private lending in our regular economy), this means (a) Alice must have at least 1 Dero in her wallet, which will be "locked" and unavailable to spend while the loan is outstanding, and (b) a pair of smart contracts are created, one which says that Alice owes Bob 10 Dero (this is the "money" of the loan) and another which says that Bob owes Alice 10 Dero with interest (this is the repayment contract).  The contract that says Alice owes Bob money can then be implemented by the blockchain as a "credit" to Bob's wallet, and would be spendable, i.e. it could be circulated amongst further wallets.  This mirrors fractional reserve banking in the normal economy, whereby banks lend to customers by creating two IOUs, one of which circulates as money, the other which is the repayment contract.  Thus money is created "out of thin air" and is then destroyed again when the loan is repaid (as the two contracts cancel each other out and are then simply annulled).

The roadmap currently does not allow for "credit money" (M1) to appear to the wallet user as if it were just like regular Dero to be spent; this would require some special update to the blockchain, which would mean fractional reserve lending would have to be adopted as one of the features of Dero rather than just an application of it.  But it does allow for the smart contracts required for implementing the loan and an app which would have the credit money appear alongside the regular Dero and spendable to other wallets, but there is no guarantee other wallet holders would accept this in lieu of real Dero for payments.  This is an advantage of the fiat banking system; users cannot tell from a bank balance whether the money is cash or is credit created from issuing loans.  The two kinds of money circulate freely in the economy as if they were equivalent and I think for fractional reserve lending to succeed this must be the case.  You don't want people doubting whether one kind of money is as good as another, even if the system guarantees that there is no problem with it.  (In effect this is what happens in a "bank run"; people start doubting the credit money and want to convert all their money to M0 which is not possible because it is only part of the money supply.)

Fractional reserve lending is possible in principle on any blockchain; what Dero brings to the table is the privacy aspect, which is crucial.  When holding credit money, it is no good if you can see the source of the money (i.e. what loans it originated from) or if in general people's debt obligations were publicly viewable.

For fractional reserve lending to be implemented, there would have to be other elements in place, the most obvious being a system to deal with loans that go into default.  When Alice lends to Bob, it is on her assessment of whether the risk of not being repaid is justified by the reward of the interest rate she sets and which Bob agrees to.  This puts the risk assessment of lending in the hands of wallet holders (and probably lending pools as these would spring up), which may or may not be a good thing (perhaps requiring only 1/10 of the loan is too little for blockchain lending; perhaps 1/3 or 1/5 is more suitable).  But if the loan is not repaid, she only risks losing the fraction held in reserve in her wallet, not the whole amount loaned (just as in the case of our beloved banks).  This means when loans go into default, there is a permanent increase in the (M1) money supply.  The M0 money supply would have to be more flexible than is currently implemented for this to be offset (for example by changing the emission rate or converting M1 tokens officially in default into M0 tokens when new ones are being mined).

I am not sure if FRB can be implemented, but if it can, Dero is probably in a very good position to do it, and I think it is a possibility that is fun to think about in terms of what would be required.

Whether it can be done and how seems to be controversial, e.g. see this discussion

https://bitcointalksearch.org/topic/if-you-have-100-bitcoins-in-your-computer-wallet-and-100-in-your-mtgox-account-51899

It has also been discussed on medium.com, though the issue of how to deal with bad loans is not discussed (surely a critical detail)

https://medium.com/@tonywillenberg/fractional-reserve-banking-the-bitcoin-crypto-economy-b2a9f2e28073

Authentication/certification is missing from this list; is it still on the roadmap?  Is a critical feature, since (as you pointed out) is required for regulatory compliance and many important applications.

As a fan of Black Mirror series, I made bunch of cold wallet and printed notes for my wife that if there suddenly something bad happen to me one day (kidnap, nature disaster, or accident, that's life who knows?), you have to know what I have been doing and you have to manage those things to sell them all or to continue my work so we might guarantee for the future of our kids. The problem is that, my portfolio changes constantly, and it's hard to manage all of those coins if you're not familiar to crypto currency, not to say if I forget to update it on time.

The born of Dero embraces my hope that one day I can create a smart contract that could automatically swap all my coins to Bitcoin/ETH/Dero and send to my wife coinbase wallet if mine is not accessed for 1 year, just in case I'm gone.

And if no one can see the contract, just me and my wife know what we've got in there and what we gonna do, that would be perfect!

Hello,
I think one of best use case of Dero will be ICOs, nowadays with spreading blockchain every one want to join the wave. easiest way to Fundraising is ICO.
but every ICO have many problem that can solve with smart contract and PRIVACY. the main problem is trust, with huge number of scam ICOs nobody knows trust a coin or not! with the mechanism that call DAICO it can be solved easily.

What is a DAICO?
It’s an improvement on the ICO fundraising model that incorporates certain aspects of DAO’s.
The idea was suggested by Vitalik Buterin in January 2018 and is aimed at making ICO’s more secure by involving investors in the initial project development process.
It will further enable token holders to vote for the refund of the contributed funds if they are not happy with the progress being made by developers.
For projects that implement the DAICO concept, it will force a level of accountability on developers and give token holders additional peace of mind that they are guaranteed to either see at least a minimum viable product or get their money back.

How does a DAICO work?
It starts off as a Smart Contract in contribution mode.
The DAICO contract will have a mechanism where contributors can send funds to the project in exchange for network specific tokens. When the crowdsale period ends, the contract will prohibit anyone from contributing any further, i.e., normal token sale.
There is one variable that comes into effect after the contribution period has ended called the tap variable. This tap in the contract can be programmed to predetermine the amount (per second) that developers can withdraw from the token sale funds.
Initially, the limit will be set to zero, but contributors can then vote on a resolution to increase the tap.


How is it different from an ICO?
The main difference is access to funds.
With an ICO, once the token sale finishes, developers have complete access to all the contributed funds. Developers have to calculate in advance how much is necessary to produce a minimum viable product and once they reach this amount, called ‘the soft cap’, they can start to work on the product and spend the money on whatever they deem necessary. If they don’t reach this initial soft cap, they have to refund the money. But if they do, there’s no further real obligation.
With a DAICO, contributors can vote on resolutions (during the development phase) to either increase the tap or to return the remaining contributed funds (self-destructing the contract).

* this part was copied from What is a DAICO, Explained, cointelegraph
this method is implemented by https://www.theabyss.com

ICOs that use Dero can easily bring millions of user to project with no marketing and effort from Deroproject team. with smart contract and PRIVACY that Dero bring, the main option for hold ICO for both investors and projects will Dero! and Dero can easily take place of Ethereum in this filed!  

but we have several issue with using non PRIVACY coins that Dero can solve it !
the biggest ICO that happen in blockchain is Telegram ICO that  raised $1.7 billion but recently news come out that SEC(U.S. Securities and Exchange Commission) may not allow Telegram to open public ICO . because of PRIVACY of Deroproject this problem can easy solved !

I think this will be one of main use case of this project.
sorry for my bad english.

A new article: https://medium.com/@867cryptocurrency/shifting-from-alpha-to-beta-cryptonote-with-smart-contracts-433423848768

New updates to Dero's tech are coming soon! 

Thank you!!

Something to think about while writing: https://www.reddit.com/r/CryptoCurrency/comments/8acg3j/dero_is_calling_out_network_attackers/

Created an Android app:
https://play.google.com/store/apps/details?id=com.dero.android

Any creative use case counts as a creative writing entry if you expand on your thought here a bit!

reserved

I have created a fan based website http://dero.us/ that talks about the Dero project. Website will be frequently updated and I have also created an app for the official dero pool that will be uploaded to the website as well for other community members.

Thanks Nelbert!

Quoting from Serena's medium.com article below:


This statement / idea has me thinking about usage of SMS to securely message individual parties without risking it being fished in transit. I can think of a couple scenarios for this in which messages would be intended to be sent securely, and could even potentially leverage a sort of "self destruction" or something through smart contract or some other means (this detail is hazy to me at time of writing this so far). A few situations I will outline below where I think secure SMS could potentially be useful:

• Today you have individuals utilizing apps like Snapchat or "incognito mode" on texting apps like Allo etc. with the pure reasoning to have the message be deleted after a certain amount of time. This way your conversation was taken place at one given point in time, and no other. The utilization of Dero's blockchain technology and integration with telecom gateways could allow for these secure transmissions through SMS to be carried out. While we understand the snapchat etc. messages to only last so long, they were still transmitted over the internet and in one form trackable.
• Perhaps military use cases or secure operations could utilize these secure transmissions as classified data or intelligence may be sent through quick communication. Now I'm sure they have their own communication methods today, and not condoning Dero to hold classified details on the blockchain, but I would imagine the technology itself could in turn be utilized for such a thing.

These are just two possibilities that I was thinking of while reading that article and really thought the telecom gateway integration stood out to me. Curious what you all think for this or if I'm way out in left field as far as understanding this concept.

Noted. Thanks for your inputs.

P.S. This can be a good solution for the digital economy. Such chenese systems are known as "Zhima credit" or "Sesame Credit". Big brother is wathcing you, but it gave some pluses for chenese society...but the big brother's eye... zero privacy...bad, disgusting.
The system of social credit gives pluses for progress for all people, but we remember about big brother. And now we have instrument such as DERO.
You want take a credit or sell something on the marketplace, you find a worker with a good real reputation and etc. All of you need it is a smarphone with
 a social credit system app built on DERO techs. The social credit system protects your interest from speculation and fraud, protects your privacy and your information. In a special app placed your wallet, social credit system, bank info, medical info and all what you need else. Biometrical identification with hidden markers   which is activated if someone forces you and automatically sends a signal to police/security.

Hello again.
I thought a little about Golang/SSL, implemented in DERO, and have some ideas. In theory the use of DERO for exchanges or PSP (payment service providers) will provide a more stable/privacy/secure connection with users and services.
Also it can give more in different web-services what uses a lot information about their users and need safe connection.
Besides, adding the NFC to a mobile wallet can give us a good and secure payment instrument.

We still have room for some thoughtful entries!

Here's some stuff to get your creative minds working 

* DERO is the first blockchain to have complete SSL in the P2P layer. This greatly increases privacy and security.
* DERO will be the first CryptoNote blockchain to have smart contracts on its native chain without any extra layers or secondary blockchains.
* Dero is currently backwards compatible with the old CryptoNote protocol (Helium Hydra)
* Dero is a new blockchain technology based on CryptoNote
* Dero combines Cryptonote privacy and smart contracts
* Dero just completed its Q1 roadmap 3 weeks ahead of time
* Dero is now starting smart contract development
* Golang daemon utilizes less resources and syncs faster than original CryptoNote daemon
* Dero Virtual Machines (in development) is a Turing complete, 256-bit virtual machine built for Dero
* Dero Virtual Machines will support the Golang language
* GUI wallets are being added in Q2
* Dero is developing atomic swaps for its new blockchain technology based on CryptoNote
* Dero is now listed on SouthXchange
* Assets may be privately managed on Dero's blockchain
* Dero is developing hardware wallets with biometric protection
* Dero will be performing regular audits and updates of the core cryptography to negate the benefits of quantum computations.
* DERO will be the first CryptoNote blockchain to have smart contracts on its native chain without any extra layers or secondary blockchains.

Thank you Lim_Mut!!