One-Way Peg

A one-way peg is a mechanism that moves BTC into a separate system (typically by locking or burning) without providing a return path - once pegged in, you can't peg out and recover the original BTC.

The classic implementation: proof-of-burn. You send BTC to a provably unspendable address (e.g., an OP_RETURN output, or an address with no known private key). The destroyed BTC is publicly verifiable on-chain. In return, you receive equivalent units in some other system - often a separate cryptocurrency, sidechain, or off-chain entitlement.

Why a project might use one-way pegging:

• Bootstrapping a new chain. Burn BTC to mint genesis tokens on a new chain, ensuring fair initial distribution proportional to economic commitment. Used by some early altcoins (Counterparty being the most notable example).
• Demonstrating intent. Provable, irreversible destruction of BTC shows real economic commitment to the new system - harder to walk back from than a two-way peg where coins can return.
• Avoiding peg complexity. One-way pegs don't require federation infrastructure, drivechain mechanics, or other approaches needed for trustless redemption.

What one-way pegs cost:

• Permanent BTC supply reduction. The burned BTC are gone from circulation forever. (This is actually a feature for the broader Bitcoin economy: any BTC permanently destroyed concentrates value among remaining holders.)
• No exit option for participants. If the destination system fails, your peg-in is non-recoverable.
• Limited use cases. Most legitimate sidechain or layer-2 designs prefer two-way pegs for user flexibility.

In modern Bitcoin practice, one-way pegs are rare. Liquid, Lightning, and most active layer-2 systems use two-way pegs or non-peg-based architectures. The one-way-peg pattern is mostly historical, with niche use in specific proof-of-burn scenarios.