Author: Sergio Demian Lerner 2020-12-31 23:37:58
Published on: 2020-12-31T23:37:58+00:00
The author of the email proposes a fully decentralized two-way peg sidechain design called Softchains. The proposal requires a soft fork to activate new sidechains, which are validated by Proof-of-Work Fraud Proofs (PoW FP), a consensus mechanism that only requires validation of disputed blocks. While PoW FP consensus can be slow, it provides a low-bandwidth way of determining if a chain, and thus a peg-out, is valid. The safest design would be a set of softchains that shares its consensus code with Bitcoin Core, with UTXO set commitments. Peg-ins occur by freezing coins on the mainchain and assigning them to a softchain, while peg-outs occur by creating a mainchain transaction that points to a peg-out transaction on a softchain and waiting for a sufficient number of mainchain confirmations.The author has two issues with the proposal, one technical and one philosophical. The technical issue concerns how the proposal prevents miners proposing a peg-out for an invalid sidechain fork that is not made available to nodes. The philosophical issue arises since the proposal is very limited in the types of sidechains it can verify, making it strictly a payment scalability solution. Drivechains, on the other hand, enable many new use cases apart from scaling, which have a lower level of complexity if implemented correctly.Potential dangers include non-deterministic consensus bugs that may cause a chain split in mainchain consensus or a reorg that invalidates a peg-out right as it would have become accepted on the mainchain, splitting consensus. It is important that each softchain produces a non-trivial amount of PoW, and it may make sense to have a minimum accepted difficulty for softchain blocks. Merged Mining could also help in this regard, but it would put an additional validation burden on miners.In conclusion, the proposal might provide more opt-in block space and open the door to chains with entirely different consensus rules. However, it may turn out to be prohibitively risky, and the author invites feedback on issues that they might have overlooked and ideas on mitigating problems to ensure maximum safety.
Updated on: 2023-06-14T16:54:48.406542+00:00