The wallet is available for Windows, Linux, and MacOS.
DLC contracts use oracles to access information outside of the Bitcoin network.
A new wallet plans to facilitate the use of discreet log contracts or Discreet Log Contracts (DLC) in Bitcoin. This was announced by the team of developers SuredBits, creators of the wallet, this Monday, July 12.
The wallet enables the implementation of this kind of smart contracts that about the use of decentralized finance style transactions (DeFi) or contracts with automated actions based on information external to the Bitcoin blockchain, as explained in the presentation of the application.
Today we launch the alpha version of our DLC wallet. This version contains all the primitives for executing arbitrary discrete registry contracts on the bitcoin blockchain.
The DLCs were created by developer Tadge Dryja, a Bitcoin researcher at MIT’s Digital Curency Initiative. At the end of last year, CriptoNoticias reviewed Dryja’s words in LaBitConf. There, the developer explained that these contracts work with oracles, that they serve as a bridge between the Bitcoin blockchain and off-chain data.
With that external communication, a DLC can execute actions based on data taken from the internet, either in sales contracts that are triggered by a specific price of bitcoin; sports betting, with results taken from the internet to determine the winner; or the automated operation of derivatives.
In the presentation of the wallet, SuredBits exposed some of the DLC executed as evidence. In the screenshot of the wallet you can see sample operations of the three cases described above and the balances depending on the result.
With the SuredBits wallet, contracts with information outside the Bitcoin chain can be executed. Source: suredbits.com.
The DLC wallet is self-custodial. That is, the private keys (and the backing of the funds) are under the protection of the user and not of a third party. For its use, “the state of the chain must be synchronized with bitcoind or the lite client node that we offer in bitcoin-s”, state its creators.
In the Github profile of the project you can download this wallet at its versions for Windows, Linux and MacOS operating systems.
Aspects that need to be improved for future versions
Being in an early stage of development, the developers assure that “the wallet has many limitations”. One of them is that the acceptance of conditions for contracts is not yet automated. That is, the user “must manually pass the DLC messages back and forth with their counterpart.”
You must manually approve the offer, accept and sign the messages manually with your partner, either by copying and pasting the messages back and forth or by sharing files with your counterpart.
For future releases, the developers They will look for ways to automate and optimize the process for DLC negotiations. Currently, counterparties for fixing DLC contracts can be found on the Slack channel of SuredBits and the Telegram DLC group.
More complex contracts with multiple oracles
Another feature that can be expected, for the future of this wallet, is the inclusion of disjoint or ad-based junction DLCs that are completely independent. By that, developers are referring to contracts based on multiple factors that do not depend on each other, for execution. In that scenario, a contract could be executed if one of several functions is fulfilled or they simultaneously, instead of a single trigger for the action determined in the contract.
For example, if team X wins the Super Bowl or the price of bitcoin is below the Y threshold. With disjoint join DLCs, you can run the DLC based on the event that occurs first.
The possibility of including this feature “allows you to build extremely complex DLCs to adapt to your use case,” add the developers through their description of the wallet.
Additionally, they point to a future develop multi-oracle DLC. With this, they seek to eliminate from the equation the possibility of a single point of failure, by depending on a specific oracle for the execution of the contract. Right now, the wallet “does not intuitively support multiple oracle streams.”
This will change in future versions. We want to provide users with options to make their DLC as resistant to censorship as possible.
Krystall Bull, DLC oracles tool
Along with the launch of the wallet, the update of Krystal Bull was also announced, a standalone DLC oracle tool “that allows anyone to be an oracle for a DLC”.
With Krystall Bull, anyone can validate data outside of the blockchain. Every oracle ad created in this app can be viewed through SuredBits’ oracle explorer, for those who wish to participate in a DLC contract that requires that external information.
DeFi in Bitcoin
When we talk about decentralized finance or the DeFi ecosystem, the Ethereum network or some like this usually spring to mind, which are usually focused mainly on smart contracts and the launch of underlying protocols of those blockchains.
However, since its inception Bitcoin was already seen as a tool that covered all types of transactions, including what we know today as the basis of DeFi.
Own Satoshi Nakamoto, the pseudonymous creator of Bitcoin, already theorized in 2010 about this possibility. Through the popular Bitcoin Talk forum, Satoshi came to refer to the potential of using Bitcoin for “trust transactions, third-party arbitration, and multi-party signatures.”
Despite this, an ecosystem of these products has not developed in Bitcoin as it has especially happened in Ethereum. In Bitcoin sidechains, such as RSK, there are already advanced products, which we have reviewed in this newspaper. An example of this is Tropykus Finance, a DeFi protocol focused on loans, with special attention to the Latin American public.
Red Lightning in the crosshairs
Also in Lightning, the scalability solution for microtransactions in Bitcoin, there are initiatives with characteristics of DeFi. Perhaps one of the most striking is Lightning Pool, a protocol created by Lightning Labs, in which users can trade payment channels. Thus, they have the opportunity to convert their own channel liquidity into an asset and offer it as a product.
The Lightning network, regarded as the great step forward for scalability of Bitcoin, it is also in the sights of SuredBits. In their presentation of the new wallet, the developers expressed their interest in making the DLC compatible with Lightning.
We strongly believe in developing the DLC protocol to be Lightning compatible so that lower value DLCs are feasible along with a more streamlined user experience (no confirmations).
The team behind the DLC acknowledges that it will take “some time” to achieve that implementation that brings discrete record contracts to Lightning. “But we believe this is a very valuable use case that will accelerate the adoption of DLC and Lightning together,” they said.