Subject: Re: [bitcoin-dev] Recursive covenant opposition, or the absence thereof, was Re: TXHASH + CHECKSIGFROMSTACKVERIFY in lieu of CTV and ANYPREVOUT

From: Paul Sztorc <[email-masked]>
Date: Fri, 4 Mar 2022 15:06:50 -0500

On 3/4/2022 7:35 AM, Billy Tetrud wrote:
>> sidechains cannot exist without their mainchain ...
> 
> A sidechain could stop supporting deposits from or withdrawals to 
> bitcoin and completely break any relationship with the main chain.
> I agree this is not as sure of a thing as starting with an altcoin
> (which of course never has that kind of relationship with bitcoin).
> So I do think there are some merits to sidechains in your scenario.
> However, I don't think its quite accurate to say it completely
> solves the problem (of a less-secure altcoin becoming dominant).

It is hard to see how this "sidechain cuts off the mainchain" scenario 
could plausibly be in enough people's interest:

* Miners would lose the block subsidy (ie, the 6.25 BTC, or whatever of 
it that still remains), and txn fees from the mainchain and all other 
merged mined chains.
* Developers would lose the ability to create a dissenting new piece of 
software (and would instead be forced into a permanent USSR-style "one 
party system" intellectual monoculture).
* Users would lose --permanently-- the ability to take their coins to 
new blockchains, removing almost all of their leverage.

Furthermore, because sidechains cannot exist without their parent (but 
not vice-versa), we can expect a large permanent interest in keeping 
mainchain node costs low. Aka: very small mainchain blocks forever. So, 
the shut-it-down mainchain-haters, would have to meet the question "why 
not just leave things the way they are?". And the cheaper the 
mainchain-nodes are, the harder that question is to answer.

However, if a sidechain really were so overwhelmingly popular as to 
clear all of these hurdles, then I would first want to understand why it 
is so popular. Maybe it is a good thing and we should cheer it on.

> Your anecdote about not running a full node is amusing, and I've often 
> found myself in that position. I certainly agree different people are 
> different and so different trade offs can be better for different 
> people. However, the question is: what tradeoffs does a largeblock 
> sidechain do better than both eg Visa and lightning?

Yes, that's true. There are very many tradeoffs in general:

1. Onboarding
2. Route Capacity / Payment Limits
3. Failed Payments
4. Speed of Payment
5. Receive while offline / need for interaction/monitoring/watchtowers
6. Micropayments
7. Types of fees charged, and for what
8. Contribution to layer1 security budget
9. Auditability (re: large organizations) / general complexity

LN is certainly better for 4 and 6. But everything else is probably up 
for grabs. And this is not intended to be an exhaustive list. I just 
made it up now.

(And, if the layer2 is harmless, then its existence can be justified via 
one single net benefit, for some users, somewhere on the tradeoff-list.)

Paul