I forget that not everyone is familiar with systems development. A 'primitive' is a generic and basic function though they are often fairly cutting edge. For a system which is more than trivial, a competent developer will start out by building 'primitives' (unless someone else has already done so which is common.) Upon these one can build a system to solve specific problems and also build other systems to solve other problems.
Stop talking gobbledygook.
What's there to explain? A sidecoin is just a Bitcoin due to the 2-way peg. The 'liquidity' is just what Bitcoin people are willing to peg to a particular sidechain. There is no 'credit' so there is no 'credit risk'. There are plenty of other risks associated with fraud, accidents, mis-management, etc. This is why an entity (e.g., Blockstream) consisting of proven, trusted, and skilled people is a valuable thing.
"A sidecoin is just a Bitcoin due to the 2-way peg"? But you talked earlier about ratios and internal circulation decisions. If its just a bitcoin, why inflate it?
[in bold] Thats what I was looking for. So you are stating that the $100m being transferred on the side chain
MUST be backed with an equivilent $100m worth of bitcoin. And thats where this falls down. You are hinting at turning bitcoin into a liquidity market when it was conceived as a peer-to-peer payment system.
For any sidechain business to compete in the settlement market, they would have to convince enough bitcoiners to handover their private keys to them. With its stellar track record of fraud and scamming, how many will? Plus, thousands of competing sidechains will exist - as I said before, liquidity will be a serious hurdle.
But its a moot point: This is largely a daydream in the context of large interbank settlement networks. They will only on-board when they are offered a side chain solution which is essentially a copper wire solution, with the immutability of Bitcoin. A solution which effectively unhooks the requirement of holding a bitcoin to leverage the usefulness of the blockchain. Thats what the real value proposition of Blockstream will be.