One Market

by Gene Hoffman, CEO & President

Traditional finance has spent a couple of centuries building business models and shaping regulations to deal with the fact that trusting people is hard, and communications used to be slow and even slower at a distance.

Stocks still only trade from 9:30am to 4pm Eastern time. Final settlement only takes one day as of May 2024, but that’s still a whole day. Buying coffee requires trusting at least four institutions beyond the coffee shop itself. Sending a wire to Costa Rica is an opaque, sometimes multi-day process where fees get “magically” skimmed off the top with no notice.

This is all going to rest with Tower Records and Blockbuster Video. It’s simply a matter of time.

A different way forward

What if we weren’t affected by banks failing, broker collapses, network outages, or financial institutions bending the rules so that selling a company means more shares show up than you’ve ever issued?

Imagine owning and having direct dominion over your assets in a way that is easy to recover, hard to steal, and easy to inherit, while having greater flexibility to transact than you have today.

If Ethereum and the EVM inform your view of blockchain technology, Chia is very different. I want to say up front that the only chain that can reasonably replicate many of these features is Bitcoin. Still, it will take significant upgrades to Bitcoin Script or the adoption of a variant of Chialisp for it to get there.

The Chia blockchain’s set of revolutionary features are unmatched to create a single global market – One Market – where anyone can transact with everyone, 24×7, across borders, and even out into space.

Offers and One Market

Offers is a core Chia primitive that makes proposing, negotiating, finalizing and settling a commercial transaction fully programmable. Using Offers, the One Market enables multiple parties to provide bids, asks, and liquidity in multiple directions for any asset on-chain—all without any trust.

I’ll demonstrate the Offers process through one of my preferred ways to buy XCH.

1. Start by purchasing some USDC and a very small amount of ETH on BASE via a Coinbase account.
2. Use the warp.green to bridge to move USDC into your Chia wallet.
3. Look at the outstanding offers on any one of the front ends to One Market like dexie.space or a decentralized exchange.
4. Let’s say you find an offer trading at $100 for 1 XCH. You create an offer file that offers to send $100 wUSDC.b for 1 XCH, and you submit it to Splash. Splash is a global peer-to-peer gossip network to push your offer file everywhere. You could also post it on Twitter, email it to someone, or strap a QR code of it to a carrier pigeon. For safety, you can set a 5 minute time out so the market can’t move too far against you – though you can always cancel an offer in the next block too.
5. Anyone who sees your Offer can inspect it and the chain to know that it really does offer 100 wUSDC.b and that it doesn’t look to be taken yet.
6. The taker now creates the other half of the transaction – spending in 1 XCH and spending out the 100 wUSDC.b coin to the taker’s wallet.
7. The taker then submits the transaction and, assuming either the maker or the taker or both added enough fees (yes, either side or both can pay transaction fees)

The deal is finalized in under a minute. Two to five minutes after the transaction, you have very high certainty of final settlement.

Offers’ unique capabilities:

Seamless Swaps

A key advantage is the ability to swap stablecoins in the same transaction and block where you’re taking the offer. For example, if you only have wUSDT (Tether from Ethereum), you can bundle a transaction that swaps your wUSDT for wUSDC.b in the same step where you take an offer for 1 XCH. This happens all at once and settles in the next block.

Deep and Liquid Trading Pairs

You won’t need to worry too much about which stablecoin you have when you want to buy something. There will be plenty of trading pairs available, making it easy to swap between stablecoins.

Efficient Use of Offers

It’s better to create multiple offers rather than one big offer with multiple options. For example, if you want to offer 1 XCH for “$100,” you should create separate offers for wUSDT, wUSDC, and wUSDC.b. Once one of these offers is accepted, the others are automatically canceled. This approach keeps the data saved on the blockchain small, reducing transaction fees. Broadcasting short text strings is cheaper and more efficient, and everyone can easily manage and prune their offers based on their interests.

Beyond Finance

It’s not just currencies, stocks, and bonds that Offers unlock. A secondary market in luxury watches can be fraught with risk, but with the One Market, you can guarantee the authenticity and provenance of the watch while doing a trustless trade for the digital title to the watch—removing much of the risk of fraud and risk of person-to-person trading.

You will still need to arrange for physical settlement, but the rightful owner can now easily prove they should possess the just bought real-world asset—something hard to do on Facebook Marketplace or eBay when buying a used car from a private party.

When we add in Datalayer, Offers turns web2 databases into smart contracting platforms.

For example:

The government of Singapore can propose to the government of Bhutan that they will make a change in their voluntary carbon registry in return for 1M wUSDC.b, and that the change be reflected in Bhutan’s registry.

1. Singapore  will email the offer to Bhutan’s negotiations team
2. Bhutan can cryptographically inspect the Offer and choose to take it, not take it, or counter with an Offer in a reply email.
3. Acceptance updates both databases atomically and puts 1M wUSDC.b into Bhutan’s wallet.

None of this matters if we don’t make it easy for anyone to trust their assets to the infrastructure. Having to rely on a centralized exchange like Coinbase or a crypto custodian like Anchorage is somewhat missing the point (though there are certainly use cases that continue to make these excellent companies very nice to have!), so we built Chia Vaults to make extremely high security custody setups as easy as managing iCloud or securing your Gmail.

Vaults

In the configuration that I expect will be enough security for most – your mobile phone can serve as the primary signing key – and we really like that because you want a large enough screen to see what you’re signing, making sure that it will do what you want, and provide optional clawbacks to further protect you.

You will need to have two backup elements, one of which can also add an additional security layer. You can enroll a Yubikey or a Ledger as a recovery key. If you lose your iPhone or it’s stolen from you, you get a new phone and initiate a recovery message that must be signed by the Yubikey. If someone steals your Yubikey and tries to enroll their phone, you will be notified on your iPhone that someone is trying to recover your Vault and have a user-definable time to override that recovery request, key out that recovery method, and add in a new one. All of this is enforced on-chain, and all your private keys never leave the hardware secure elements.

And, we all have to face our own mortality… The third element is an institution or corporate security officer that can recover your vault. If someone attempted to forge documents to get the institution to attempt a recovery, you can set a two week period where you’ll be notified and be able to cancel the recovery and key out the misbehaving institution.

All of this can only be done using the most decentralized blockchain ever based on node count and Nakamoto coefficient. It’s as secure as or more secure than proof of work, and both are considerably more secure than proof of stake. All while using 1/500th of the power the proof of work currently uses annually.

Blind to Borders. 24×7. Trusting only math. Easier to use than cash and harder to steal.

One Market.

original source – Chia.net