Nostr Web Client

Good episode.

Drivechain folks are very optimistic. In reality it will be experimental R&D on the side of bitcoin, where we might make some new discoveries.

IMHO as long as folks know the risks and that it's custodial, they could risk a few sats in a different play ground.

Easy to get rekt, but imho wont spread main chain.

jimbocoin 🃏 2y ago

My reasons for opposing Drivechain:

1. Today, miners are purely profit driven. Work in -> Bitcoin out. Drivechain introduces political incentives: which chains to activate/deactivate and when.

2. Since miners vote on sidechain activation/deactivation, a 51% miner can unilaterally decide each side-chain’s fate. Including the ability to take all sidechain coins for themselves. This is a new incentive for 51% attacks that did not previously exist.

3. Pegs are made to be broken. The time lag for peg in/out guarantees arbitrage. The second-order incentives around sidechain rollbacks are unpredictable.

4. Drivechain will not kill shitcoins. The main point of shitcoins is pump-and-dump. If the pegs are successful, shitcoiners are disincentivized from choose them over spinning up their own chains.

5. Contrary to supporters’ claims, Drivechain cannot increase miner revenue. The subsidy schedule of Bitcoin is immutable. So the only way miner revenue increases is by fee pressure. But a supposed benefit of Drivechain is to move transactions off of main-chain, which would reduce fee pressure.

6. Drivechain requires softforks to implement, because new OP codes must be enforced by nodes. But regular main-chain users have no incentive to adopt these rules. This makes the risk of total reversal greater than previous softforks that directly benefitted regular users.

7. Drivechain proponents systematically ignore these concerns. A common refrain is that activating Drivechain will not affect users of main-chain. But the risks of arbitrage schenanigans, miner politicization/centralization and softfork rollback deserve clear answers.

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Discussion

Melvin Carvalho 2y ago

Largely agree. Drivechain proponents are very optimistic. I think reality will be different to expectations.

1. There's 256 slots, so while a concern, I dont see a huge amount of politics here. Getting 256 new projects on bitcoin would be a stretch anyway.

2. Yes, so that's why I dont think the side chain game theory works. Self interested rational miners will always take the coins in escrow, unless it's a small experiment, or they happen to stumble upon a sustainable structure.

3. The peg has no chance. Miner deposits coins, miner sells new coins on peg, rinse, repeat, and then they keep everything in the escrow. There wont be a peg unless they get lucky.

4. Drivechains wont kill shitcoins agreed. That is part of the optimism. But it will allow R&D over bitcoin, with different techniques which could become useful.

5. Merge mining can increase revenue, but yes, it could also lower fees on main chain. Whether fees go up or down is an unknown, but it's something that is good to study, because eventually the subsidy will go away.

6. Biggest risk of DC is a fork type accident, yes. Last thing you want is to end up with two coins. That only happened last time because roger would not listen to anyone, and thought he could kill bitcoin. I dont think this group are in the same category.

7. People are talking across each other and listening to about 10% of what the others say. But I think there's hope for a good discussion on the topic, education and all sides to learn something.

I'd love it if drive chains worked. But I dont think the game theory holds up in its current form, and it would be an experiment and educational discussion, where some other new ideas emerge. I think a lot of this can be build over nostr, given time, too.

jimbocoin 🃏 2y ago

> But I dont think the game theory holds up in its current form,

Agreed. 🤝

> and it would be an experiment and educational discussion, where some other new ideas emerge.

Ultimately, Bitcoin would survive the failed Drivechain experiment. My preference is to skip it.

There’s enough design space with Lightning, Taproot and now Nostr for experimentation. Introducing new and unpredictable incentives to main-chain mining is not worth the risk.