Risks of Bridged collateral types in a multi-chain world

UMA Protocol
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Is there a generalised risk of using bridged coins as collateral?

The largest bridge coin is wbtc but Ren is growing apace and there are other decentralised "bridge solutions such as tbtc.

At the moment, Ethereum is the only serious defi game in town, but there are challengers on the horizon and atomic swaps are facilitating easier cross-chain transfers. Ren is branching out onto Polkadot and has a couple of collaborations there for “bitcoin on dot”.

Following on from the liquidity and peg issues raised by RenDoge, could there be an issue if bridged btc exited the ethereum network for another L1 chain, without any decrease in the amount of unbridged btc, bearing in mind that those who use “btc on eth” are substantially more likely to use btc on another chain than bitccoiners who keep their btc chain native, and that the growth of on-eth btc has slowed in the last few months. Or alternatively that another “btc on eth” solution could attract attention and draw liquidity away from an UMA collateral type.

To some extent this is relatively moot with the expiring contract, but if a bridged coin was used in a perpetual contract could this cause issues should there be an generalised exit from one bridge or one chain to another?

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I’m not sure this would create an issue, since if you took your bridged BTC from Ethereum to some other chain, the bridged BTC on Ethereum would be locked up. It might actually make the bridged tokens more liquid, since there may be arbitrage opportunities between chains that make the bridges themselves more efficient.

The number of bitcoins in circulation has not actually gone up; it’s just been shuffled between a few different bridged Bitcoin-like tokens on multiple chains.

Say you spot a liquidatable UMA position backed by bridged BTC, and there were a few different versions of bridged BTC on a few different chains. You have multiple routes to trade your way into the collateral you want, which you can use to mint synthetics and liquidate the position. The faster the cross-chain arbitrage is, the better for UMA’s model.

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