maybe. but i'm just going along with what's being advertised here. a well vetted, tested SC thru a federated system that is then brought online as a Bitcoin linked SC is "unlikely" to fail. given that, the 2wp is acting like a risk free put. maybe a call is a better term, i don't know. but then, my question about manipulation still stands unanswered. to assume a stable 1:1 price relationship of BTC to scBTC seems naive i think. there's always volatility and we see signif disparities btwn exchanges today that fluctuate sometimes wildly.
No it is not naive and Adam has explained exactly why. The peg being algorithmic, it creates even more efficient arbitrage. There are very good reasons for why the 1:1 price exchange will remain stable. You need to propose a reason why it will not because from my point of view and many others here it is clear as day.
Clearly given that this is the best case confirmation time for bitcoins, and the peg protocol is algorithmic there will be effectively ZERO spread, because the algorithmic peg is an unlimited standing offer at parity (plus per KB fees) and is in direct competition to any market offer, and rational actors take the lowest offer.
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One can look to other bitcoin arbitrage scenarios for a hint at how it works. Look at the spread between btc-e & bitstamp now that multiple people are systematically arbitraging it. That is a far riskier arbitrage because you are relying on governance and security management of bitstamp & btc-e in the face of 50% failure rate of bitcoin exchanges. Ok these ones are survivors and better than full history average no doubt but still there is non zero risk there and yet the spread is basically 0, this is because of competition amongst arbitrators. Compare to a 2wp, where there is an algorithmic arbitrage. A bot can take that all-day long at zero risk (using smart-contracts).
true, it's into the future. but how far? there will be a transition point and if a risk free put (on BTC) exists today, why not move a major portion of your BTC to the SC today and leave it there?
2140 is how far. Until then, block subsidy will entice miners to stay on the mainchain. Meanwhile they will merge mine any sidechain that will gain significant traction and value AND the mainchain. Your argument about smaller miners losing money and mining only the sidechain holds no ground. First smaller miners will soon be extinct and as long as the most important majority of the mining power does not defect there is no danger for the mainchain.