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Why does it matter?

UTXO DeFi removes the need of interacting with an unsafe smart contract to participate in decentralized finance.

What is the main issue with current DeFi?

Trust! UTXO based decentralized finance reduces the trust layers needed to provide the same functionality as other chains thus removing the possibility of ‘rugs’ caused by exploitable smart contract code found on EVM chains.

How is this done?

Rather than forcing users to send tokens to a smart contract or make a deposit into a centralized account, UTXO DeFi uses transaction tagging and locking into specific addresses signalling participation in whatever is offered on that address, removing two levels of trust in terms of potential code errors with DeFi and depositing issues with CeFi.

Why a tagged transaction instead of tokens and contracts or having an account?

The need to trust code for tokens and contracts disappear along with knowing where your funds go if depositing into a centralized exchange.
UTXO DeFi is extremely secure due to the inherent protection from the host blockchain meaning to attack the funds, an attack on the native chain is needed. For Bitcoin, Litecoin and Bitcoin Cash, this is an incredibly costly endeavour, and for other chains like Raptoreum, Firo or Comodo, this is impossible due to technical innovations like chainlocks or distributed /delegated proof of work aka Dpow.

Can someone hack the deposit addresses?

Unlike current DeFi smart contracts or exchange wallets, UTXO deposit wallets can be kept 100% cold and offline until payment wallets need refilling or transactions need signing and broadcasting.

Can someone attack and spoof data feeds?

Yes, but just like 51% attacks, it is extremely costly to do and difficult with distributed feeds from the same source. As payments are on the hour after transaction, an attack would have to be performed for an extended period of time on all routes into the matching engine. By adding a single private data feed as a sanity check, it becomes a very complex exercise.
The goal isn’t to be immune, but where there is no gain carrying out such an attack. This is easily achieved with option size limits and a spam filter.

Can someone attack payout addresses?

Yes, but the same applies to the payout addresses as the deposit addresses: they can be used for offline signing of alternatively broadcast transactions.

The main issue lies with hot payout wallets. This can be remedied by involving PSBT which forces an attacker into targeting multiple locations vastly increasing the complexity. Additionally we can strengthen this when combined with non node wallets also performing PSBT.

Why isn't it perfect?

This is as secure, trust-less and transparent than any top tier blockchain development will allow on the market today.

Banks close daily at the moment, EVM DeFi contracts get hacked or ‘rugged’, and centralized exchanges also get hacked, embezzle and also exit scam.

The only risk here are open positions in the deposit addresses for up to two hours.

We are pioneering brand new UTXO technology