tBTC redemption mechanism design flaw

[ben]

@Mr_T

eBTC is a synthetic BTC position and can’t be used to redeem for native BTC. There’s no custody aspect to it, so this issue isn’t something Badger needs to concern itself with.

the ETH being used as collateral to mint with could still be from a sanctioned address

[freddythefilosopher]

If funds are in a sanctioned address, the owner would just have to transfer them to a new address and then use the bridge.

This would be acceptable. The DAO would not process a transaction from a sanctioned address thus removing liability from the DAO. Remember, the goal would be to do what is necessary to protect the DAO.

The it is not reasonable for the DAO to maintain chain history on its own. It would be acceptable to use one maintained by others for global use.

How is the Badger planning to approach this with eBTC?

eBTC does not have the same risk of laundering that tBTC does. This is because an address using ETH as collateral for eBTC will deposit and mint to the same address. Whatever sanctions exist to prohibit that address from laundering funds cross-chain or to new address will work equally well with either the ETH or eBTC tokens. It’s equivalent to an LP swap.

Plus, eBTC is fully decentralized and permissionless and any user can interact directly with the contract for minting or redemptions.

[ben]

@freddythefilosopher

eBTC does not have the same risk of laundering that tBTC does. This is because an address using ETH as collateral for eBTC will deposit and mint to the same address.

What laundering risk? All of the information around the transfer of value in a mint or redemption is available onchain.