DERO - Terra bridge - Technical discussion

Starting this thread here for a technical conversation as to how a trustless Terra - DERO bridge would be executed. Due to my limited knowledge of how trustless bridges work and a limited amount of information I was able to find, I decided it was best to open up the discussion.

UST is becoming the de-facto decentralized stablecoin of choice.

The end result of this proposal would be to determine the technical requirements / setup requirements so that we could submit a proposal to both the Redshift team and potentially the terra community. I will use UST as an example of an asset, but the same can apply to other Terra assets (eg LUNA, MIR etc)

Questions I have:

  • Are assets on the origin chain burnt when crossing or are they locked by the smart contract? Do different bridges handle this differently?
  • How do 2 separate blockchains interact via smart contracts - do they need to be run on a dedicated server that runs both chains? Would the bridge smart contract on the Terra side interact directly with a DERO service (RPC?)? And vice-versa, the DERO bridge smart contract, would it interact with the terra chain via a client? Or am I totally kicking in the dark?

Notes / thoughts on privacy / use cases:

  • I considered the use case of needing to “claim” tokens on the DERO side for reasons of privacy, but a) the bridge would need to generate some sort of pin code, and there could be nothing on-chain that could be used to claim; I sense there could be funds safety issues in this approach).
  • So it would be as simple as an individual setting up a “receiving” DERO address to which a third party could determine from the Terra chain ledger the audit trail of incoming assets, but once on the DERO network, these could be transferred further to fully private wallets.

A secondary question is:
What would happen if a Terra native DERO also existed, allowing for seamless transfers of DERO itself, giving it access to a series of DEXes already built on the Terra (and Cosmos) chains such as TerraSwap, Astroport, Osmosis (a most excellent DEX), Gravity etc. This would also allow excellent on-ramping opportunities into DERO via the Terra bridge from Ethereum, BSC, Harmony, Avalanche and Solana) and via IBC to all the other Cosmos chains.

Note that there are numerous FIAT on-ramps into UST/Terra already being built (eg Kash, Outlet finance, Transak, etc etc) and the widespread presence of UST in my eyes makes it an excellent pair to DERO.