ChronoLogic Is Awarded Grant From Keep Network
The ChronoLogic Team was awarded a grant from Keep Network to build a tool that helps stakers in their environment to avoid liquidations with an automated redeeming system.
ChronoLogic's development team is currently working on a tool that will allow KEEP's stakers to automatically avoid liquidations while running a node in their network that in turn brings in Bitcoin to Ethereum.
With CL's unique expertise in dealing with timely executions on Ethereum, we are proud to foster and incentivize decentralized economy, a field where automation is not only needed but necessary. As for past accomplishments, the project has developed the Ethereum Alarm Clock — a solution that allows on-chain scheduling of transactions, currently available via MyCrypto and MyEtherWallet; and Automate — which is a "swiss army knife" when it comes to time and transactions, that even helps you save up to 99% on fees when transacting on the network.
For more info, check Keep's article on our partnership, and also their Twitter activity, as displayed below:
Keep Explained
Keep Network is a second layer on top of Ethereum that allows users to safely and trustlessly convert actual Bitcoin (BTC) into an ERC-20 version of the asset, TBTC, which can be redeemed in a 1:1 ratio for BTC again by anyone holding it.
The nodes loan both computer power and capital to secure the network, creating an ironclad system that ensures both the usability and security for any Ethereum user to be able to rely on TBTC as a true BTC tethered asset.
To create 1 TBTC, whoever is initiating the minting process will have to deposit 1 BTC on-chain as well — which is, in turn, redeemable later by any party holding said 1 TBTC. On the Keep side of the system, the ETH equivalent of 150% of the current price of ETH/BTC is locked up by Keep’s smart-contracts as collateral — this ETH comes from 3 different Keep nodes.
At the moment of redeeming the TBTC for BTC, the nodes' ETH is released and the BTC is sent to an address of choice by the party redeeming the TBTC.
The Problem
When managing a Keep node, you come in knowing that your ETH will be used as collateral to create the network's TBTC. The issue is that ETH and BTC prices don't always correlate, and at some point 1 TBTC could be undercollateralized by its locked ETH counterpart. What happens then?
Here's where nodes' capital could be lost: the collaterization ratio of ETH/BTC is recorded at the moment that the nodes' ETH is bonded to any TBTC minting. So, at a later date, this ETH could fall below the prearranged minimum collaterization rate, which is 125% of ETH per BTC. At this point, in order to keep the network secure and the assets worth valid, a liquidation process starts.
Once that happens, the node operator has to be ready to redeem said bonded ETH and redeem any BTC amounts so the locked assets are released before the values are lost in favor of a healthy network.
Although avoiding liquidations seem simple enough, being on the watch out for these to happen implicates in paying attention to ETH/BTC prices 24/7 and also having the underlying asset — TBTC — ready to go if there are any liquidations, which is proven to be a huge headache for any node operator.
At the moment of writting, Keep's node operators overview tool shows that over 100 operators have their ETH funds on the line right now from providing liquidity and loaning their assets to the network.
These are all potential users for the coming tool since each and everyone of them had to deal with ETH liquidation issues at one point or another.
ChronoLogic's Solution
In order to solve this problem, we had to come up with a solution that would:
- Watch out for ETH/BTC price
- Account for current bonded ETH and its current collateralization rate
- Have tBTC available and a trustworthy system to send those out
- "Recycle" BTC for tBTC anytime any redemption was performed
Although the execution of said tool is complex, we have already gone through some steps to secure its completion in a timely manner. Here's a preview of the upcoming tool:
The interface is split into two sections:
- configuration, where the user will be able to provide payment for the service (since redemptions incur a cost), check their ETH balance, specify which operator node they want to be protected, and give their contact email for notifications
- monitoring, where all active deposits are listed in real time, as well as past deposits that were redeemed by the tool
The design of the interface aims to be as simple and easy to understand as possible and all the necessary information and features fit into one screen for the user’s convenience.
Keep and ChronoLogic's Future
This is just the first interaction that ChronoLogic has with KEEP, and the team does hope to bring in more and more value to the project moving forward. At this stage, ChronoLogic would also like to thank the KEEP team and community for all the help and technological fostering that they are bringing into our wonderful blockchain ecosystem.
As we are ever evolving and passionated blockchain builders, stay tuned to our GitHub to check out for new and exciting updates on the matter: https://github.com/chronologic/
