While I haven't rejected sidechains entirely yet, this particular proposal seems uninteresting, especially for two reasons.
One – it introduces a new token for each sidechain and suggests atomic swaps to be used for the exchange of the mainchain token with the sidechain token. Such a model seems nonsensical to me because there seems to be excessive number of blockchain projects that can be used similarly just as the sidechain in this proposal. Pick almost any altcoin out there and you can atomic swap it with Bitcoin. The fact that your sidechain is somehow mathematically bound to Bitcoin seems arbitrary because at the end you have a new token and a new issuance model. Therefore this is not extending Bitcoin economy, which is strictly limited by its convergence to zero inflation. This proposal is inflating the supply with a new token, which goes against what many people consider as a pillar of Bitcoin's value proposal. I think if you implement this proposal, you are going not to be considered as a Bitcoin sidechain, but you will be, from certain point of view, indistinguishable from any other altcoin. At the level of my current understanding, the only interesting sidechain model is the [theoretical] one with a two way peg with Bitcoin, preserving the issuance policy of Bitcoin.
Two – the security of the proposed system seems to be very fragile, unless I have missed something. When I think about sidechains, I expect that it should be possible to create a niche chain which is used by few participants while the security of the chain is somehow guaranteed from its bind to the mainchain. If this was not the case, such a niche sidechain could easily be attacked, even if just stalled/censored for a long period time, with just a small [absolute] investment from an attacker, although this investment might be large if taken relatively to the utility of this niche sidechain. So if we speak concretely about your proposal, you assume honest majority of validators. But in your system the validators come from locking of stake on Bitcoin chain by nodes that are interested in a particular sidechain. If you put this model on a niche chain where only few participants are interested in it, it's trivial for an attacker to be stronger [have more Bitcoin to lock] than all legitimate users together. You should only use honest majority assumption where the scope is global, where it is very hard and very expensive to obtain majority.
Hi all,
I've been working on a sidechain protocol with no trusted third party. You can find the whitepaper here.
Abstract. Coins is a Bitcoin extension designed for payments at scale. We propose an efficient solution to the double-spending problem using a bitcoin-backed proof-of-stake. Validators vote on sidechain blocks with one-time signatures, forming a record that cannot be changed without destroying their collateral. Every user can become a validator by locking bitcoins. One-time signatures guarantee that validators loose their stake for publishing conflicting histories. Checkpoints can be additionally secured with a bitcoin-backed proof-of-burn. Assuming a rational majority of validators, the sidechain provides safety and liveness. The sidechain’s footprint within bitcoin’s blockchain is minimal. The protocol is a generic consensus mechanism allowing for arbitrary sidechain assets. Spawning multiple, independent instances scales horizontally.
Feedback is highly appreciated!
Thank you
- Robin