Shinobi’s Strawman is a weekly collection the place our Technical Editor Shinobi challenges the Bitcoin neighborhood, aiming to fire up dialog round heated technical debates.
We’re going to attempt one thing of an experiment at this time.
Drivechains are being proclaimed by some because the savior of Bitcoin, the reply to all of its issues. It solves the long term security budget, permits complete freedom to incorporate new features into Bitcoin, and presents no downsides for present Bitcoin customers.
Sounds too good to be true? It’s:
1) Drivechains Change Miner Incentives
Drivechains introduce a hodgepodge of latest variables into miners’ incentives, and after introducing that instability advocates push for users simply adopting a degraded security model for all new use cases and functionality by using a sidechain in lieu of changing the base layer. How is that this any completely different than an outright assault on Bitcoin self custody?
2) Present Sidechains Have No Adoption
There have been many various design proposals for sidechains over time, however the one at the moment deployed ones are run by federations (Liquid and RSK), each of which have failed to achieve any significant degree of adoption since they had been deployed. Does this imply sidechains should not price continued improvement effort? Or are they price it, and the failure of federated chains to be adopted is solely the results of shortcomings in that particular sidechain design?
3) Drivechains Exacerbate The Dangers Of MEV
MEV is one thing that’s potential on Bitcoin already, as systems like Stacks are demonstrating, however at the moment the types of MEV potential on Bitcoin are both generated by completely unbiased altcoins like Stacks (which traditionally have trended to an insignificant share of miners’ earnings, like Namecoin), or very low within the degree of complexity (like frontrunning Inscriptions). Drivechains open the door to arbitrarily complicated types of MEV on sidechains, whereas additionally guaranteeing that the token producing that MEV is pegged to the worth of Bitcoin. I.e. it can’t merely fade away to an irrelevant fraction of miner earnings as individuals cease shopping for an altcoin. This drastically worsens the dangers and potential injury of MEV on Bitcoin.
4) No, Swap Markets Aren’t An Reply
Paul Sztorc replied to a few of these concerns on Twitter, however these responses do probably not deal with the basis points. Swap markets would possibly sound like a solution, however the actuality is that these simply shove the liquidity necessities onto yet one more social gathering, assuming they’ll present large quantities of liquidity for nearly nothing in return. Which may work for small scale utility customers, or having liquidity accessible to arbitrage uncertainty across the peg, I don’t suppose it is a foregone conclusion that sufficient liquidity to cowl the “answer to the safety price range downside” with out slippage is a given, to say nothing of all the opposite customers who would wish to swap out and in. He then goes on to disregard the distinction between a mainchain reorg, which requires redoing work and vitality expenditure, versus a sidechain reorg which doesn’t. Lastly, he equates a random particular person for no logical or revenue pushed purpose giving cash away with somebody producing a revenue with an exercise they’re the only gatekeepers of.
Look, in the end, I’m a Bitcoin maximalist. I need what’s finest for Bitcoin.
I feel drivechains are silly, harmful and a waste of time, however I wish to hear your ideas on the topic. Am I incorrect concerning the factors above? Is there another excuse that I must be towards drivechains that I’ve ignored?
Please don’t write to me with some random hopium. I’m open to novel opinions. I need the dialog to progress. Above is my finest summation – we merely aren’t anyplace near a significant consensus on drivechains.
My DMs are open. Opinion@bitcoinmagazine.com. Let’s hash it out.