Subnostr

I haven’t seen any compelling arguments against #drivechains. You say that #drivechain would compel miners to do things that are not in the interest of the network. Can you give me one example of a “thing”?

BitcoinStu 1y ago

Scenario:

Imagine a drivechain that has been implemented to enable a new feature on a Bitcoin sidechain, such as more complex smart contracts. This sidechain allows for more flexible and powerful programming capabilities compared to Bitcoin's main chain.

Issue:

In the drivechain model, the security and proper functioning of the sidechain rely heavily on Bitcoin miners, as they have the authority to validate and approve the transfer of bitcoins between the main chain and the sidechain. This creates a few potential problems:

Miner Centralization: If a small group of miners gains control over a significant portion of the mining power (which isn't uncommon in Bitcoin), they could potentially exert undue influence over the sidechain. This might include censoring transactions or manipulating the movement of funds between the main chain and the sidechain.

Misaligned Incentives: Miners are primarily incentivized by block rewards and transaction fees. If the sidechain does not offer sufficient financial rewards to the miners for their extra work and responsibility, they might neglect their duties related to the sidechain, leading to slow updates or lack of maintenance. Worse, they could accept bribes to act maliciously.

51% Attack Risk: In drivechains, the security of transferred assets relies on the honesty of miners. If more than 50% of the miners collude or are otherwise compromised, they could approve fraudulent transfers or enable the double-spending of bitcoins on the sidechain. This risk is exacerbated if the sidechain's operation is central to substantial financial activities but does not contribute significantly to miner revenue.

Consequence:

These vulnerabilities could lead to a loss of trust in the sidechain's security and, by extension, could damage the reputation of Bitcoin as a secure and decentralized currency. Users and businesses might lose funds, or the functionality promised by the sidechain might be undermined by the actions or negligence of miners.

Broader Impact:

The governance issues and potential for misuse of power could lead to regulatory scrutiny, further complicating the legal landscape for Bitcoin and potentially leading to restrictive measures that stifle innovation and the adoption of blockchain technology.

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Discussion

LogicallyMinded 1y ago

I know this argument and I don’t find it compelling. My initial point was that #covenants would mess up with the integrity of the base layer and that #drivechains wouldn’t. I maintain this view. The scenario that you outlined doesn’t show that the integrity of the base layer would be compromised. If you keep your #Bitcoin on the base layer you won’t by affected by whatever wrong thing could happen on a #drivechain.

In terms of impact, a drivechain is no different than wrapping your #BTC and sending them on another L1. Of course when doing so you’ll have to accept different security assumptions and it’s up to each of us to make this assessment.

When it comes to potential reputational damage followed by more regulations, these are second-order effects which can arise for a multitude of reasons and which are broadly out of control of the network. The strength of an unstoppable system like Bitcoin is that if it does what it’s supposed to do, it doesn’t have to worry about second-order effects as those wouldn’t directly impact the way it functions. I actually had the exact same concerns when researching drivechains (you can check out my previous posts if you want to verify) and came to the conclusions that I just discussed.

To sum it up I would say that what happens on the drivechain stays on the drivechain we can’t say the same about covenants which can profoundly change the nature of the base layer such as the emergence of parasitic on-chain KYC that would greatly impact the fungibility of your bitcoins even if you never interact with a covenant.