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@ Dikaios1517
2025-05-17 16:44:58
It's just custodial Lightning with extra steps. However, those extra steps come with some meaningful privacy gains.
Instead of the custodian keeping track of which account is owed a specific number of sats, the mint just keeps track of the total amount of sats that are owed in the form of tokens generated by the mint. Users of the mint can trade those tokens with anyone willing to accept them completely privately, and if they want to trade with someone who is unwilling or unable to accept the tokens their mint created for them, they can have the mint destroy the tokens and send their trading partner sats via Lightning instead.
Just like any other custodial Lightning service, it is the responsibility of the custodian (the mint) to ensure they have enough sats to back up all the tokens they have generated. They absolutely COULD mint more tokens than they have sats. But then, any Lightning custodian could say they have more sats than they actually do. The rug risk is the same in either case, and may be higher in the case of Cashu mints, since it is so easy for just anyone to run one.