Abstract

A fragmented bitcoin liquidity reserve that guarantees your bitcoin back

In the case of custodial bitcoin vault, security of user funds depend on the trusted signers of the multi-sig. Unlike lightning, vaults do not provide the user with a commitment/exit transaction to guarantee deposited satoshis back. Boomerang proposes a fragmented reserve design with an escape hatch to prevent loss of funds, when signer liveness is compromised. While a similar design proposal exists [link] for a personal vault which clawbacks to a secure cold wallet, Boomerang is designed for a distributed network to relay bitcoin without a centralised clawback and instead rely on a refund transaction to all the depositors. Along with an escape hatch, Boomerang relies on relay capacity of each Fragment, which is estimated to be 1% of the total reserve value deposited in the individual fragments.