The SmartBCH centralized bridge nightmare.

SmartBCH is the solution to Ethereum ETH and Bitcoin BTC's high transaction cost from the Bitcoin Cash BCH community and group of developers. It is supposed to bring Smart Contracts and decentralized finances on top of layer one since it is a sidechain. Because of the way sidechains work, SmartBCH has an inherent problem: the bridge between layer one and the sidechain itself, and that problem is now evident in light of the current market conditions.

CoinFlex is acting as our trusted party to host the SmartBCH bridge while developers work on bringing Sha-gate and now even talks about Sha-gate V2. CoinFlex has officially eroded that trust because they have halted all the assets they have custody of in their centralized exchange. They have proven what many warned about SmartBCH, a product unsuitable for Alpha release. After all, it didn't have a way to save guard funds between the two chains.

CoinFlex is having some issues with one of its customers not paying back their obligations to them. As such, they cannot cover their responsibilities with the Bitcoin Cash community. Note that this could change anytime because the bridge could be allowed again, and everything will return to normal. Not so fast; if you get access to layer one again by any miracle, it will be a good idea to remove any funds you may have in the sidechain as soon as possible once you can do so and wait for a better solution when it comes to the bridge.

Now it is not only SmartBCH that has been taken hostage or that it has been proven that centralized bridges are failures waiting to happen, but now we have the issue of FlexCoin and FlexUSD and, for that matter, any product coming from CoinFlex. I don't know you, but I don't trust exchanges with my private keys, and as such, I can't trust them with stable coins either. They were offering an 8% interest on FlexUSD. Now we know the real risk of that yield which is if the exchange goes under, you may never see ever again your initial investment, and as such, it makes the usage of centralized, stable coins a nightmare too.

Not only do you have the issue of SmartBCH, but also the issue that CoinFlex offered the most popular stable coin on SmartBCH. That is a double whammy from my book.

The solution.

Don't put any serious money that you are not willing to lose into SmartBCH even if a decentralized bridge comes online and fully working because decentralized bridges can also fail and be attacked by hackers looking to gain the system.

When it comes to assets inside the sidechain, only buy those proven assets that are not meme coins or something without value. If possible, only use sBCH and a stable currency over-collateralized by Bitcoin Cash, not a centralized, stable coin or a derivation from another.

Only participate on a decentralized exchange with a full suite of features, not something that is not even 10% built, like Mist, Eben, and all other dexes tokens that now exist. Those dexes are garbage as they are right now because they lack features like margin trading, trading with limit orders, and, most importantly, a genuine decentralized stable coin.

Conclusion.

If your bridge is centralized, your withdrawals can be freeze case and point to today's SmartBCH situation; if your stable coin is not decentralized, you risk a third party involvement. In the case of FlexUSD, that risk is CoinFlex itself; if the exchange fails, so will your stable coin. If dexes don't offer you a fully featured experience from the get-go, they are not good, and that means decentralized exchanges should provide you with a stable coin backed by assets and not a company.

Next time you want to yield farm, ask your dex developer when they will create an overcollateralized stable coin that is either backed by Bitcoin or Bitcoin Cash. Because centralized, stable coins like USDC, USDT, and FlexCoin are a nightmare waiting to happen, just like the one SmartBCH is having right now.

SmartBCH developers should look to adopt the Rootstock RSK bridge solution while they work on Sha-Gate to make sure SmartBCH can continue forward.