Abilities and Limitations

Yes, we could. The concept of the 1st sidechain BIP, hashrate escrows is flexible enough to copy any blockchain – public or private, proof-of-stake, proof-of-space, proof-of-steak, etc. Even weirdo stuff like Corda.

However, Drivechain ships with a specialized, customized feature called ‘blind merged mining’ (BMM), which makes consensus on the sidechain free. As in, free in both the economic and engineering sense (see below). If a chain uses BMM, it freely inherits all of Bitcoin’s proof of work security. In fact, the sidechain gets all of Bitcoin’s security, even if its transaction fees [or its other miner-revenue-sources] fall to zero.

For those reasons, BMM is the recommended consensus algorithm for Bitcoin drivechains.

( …perhaps we should invent some sexy-sounding “proof-of-X” name for BMM, like “Proof of Merge”? And bundle it with ridiculous-sounding (but technically true) claims like “even more efficient than PoS”. )

The original specification for this is here, but I will try again.

In general, BMM is a kind of “embedded consensus”, as though each sidechain blockheader were a Counterparty txn. BMM only allows one side:block to be found per main:block. This side:block is controlled by a kind of “critical coinbase tx real estate”, which the mainchain miners auction off to the highest bidder. We thus know that each sidechain block “wasted” the “most” resources. And since the blocks are forced to refer to their parents, we can determined the “most waste” chain. It is waste of BTC instead of PoW-hashing, however.

Here is a more detailed explanation.

Since it relies on embedded consensus, this trick requires a “regular” PoW blockchain to already exist – it can’t work all by itself. (Ie, Bitcoin Core can’t “switch” to it.) All the money earned by all sidechains will ultimately go to mainchain Bitcoin miners, so, economically, it really is as if miners were actually mining several chains at once. Except, in this case they only need to run a Bitcoin node.

It is true that sidechain nodes (called “Simons”) do get to keep a portion of the sidechain’s tx fees. Therefore, not all of it will go to the mainchain miners (called “Marys”). However, the Simons compete on making this portion as low as possible, and the technical details allow it to go quite low, even (theoretically) to the Satoshi or sub-satoshi level. In contrast, a Bitcoin full node today may cost $20 or $50 per month in bandwidth alone. And the complaints regarding “miner centralization” all concern bandwidth-hog sidechains where the cost may be 10 or even 1000 times higher.

For a super-intensive “ESPN 4K Sidechain” of some kind, miners have the option of killing their full node, and using BMM instead. Instead of paying thousands per month on the sidechain node, they (or their pool admin) can simply surrender a $0.10 gratuity per block (which comes to $432 per month). Or, as I say above, the gratuity may fall even further than that, as little prevents it from taking on the smallest possible value.

If the fullnode costs are too low to justify BMM…well that simply indicates that there’s no problem and no one needs to care.

Here is a more detailed explanation.

Furthermore, I regard “miner centralization” to be an unfalsifiable theory, and therefore unscientific.

Finally, the theory that “sidechains cause miner centralization” does not make sense, even in its own terms. For the theory would imply that many things would cause mining centralization, and most of these are unpreventable and much more harmful. For example “an individual choosing to offer $5 to a miner, for each block (s)he solves, if they reveal their mailing address” would also “cause miner centralization”, and this cannot be prevented.

Yes. For example, you could have a sidechain of Bitcoin that was also a sidechain of Ethereum. The user would need to run all three full nodes, in order to validate the sidechain. The sidechain might need to be blind merged-mined on only one chain, or perhaps it could alternate chains or have an extremely strange chain-integration rule. The security/stability of the sidechain would probably be equal to that of the most insecure/unstable mainchain.

I’m really not sure why you would want to do this, however.

Well, the only thing that comes to mind is the fact that Monero has a larger anonymity set. You see, users will probably want to move quickly from one drivechain to the next, and they will probably also want to settle to the mainchain whenever possible. So, fewer people will be leaving their money on a Monero-sidechain.

On the other hand, the quantity “number of transactions per day” should be the same, whether it is on a Monero sidechain or on regular Monero. So perhaps it actually is the same anonymity set.

Some people say that txns on a hypothetical Monero side would be de-anonymized with they move side-to-main (in other words, when users pull their money from the Monero sidechain back to the regular Bitcoin chain). I’m not sure that this is the case. However, by leaving the Monero cryptosystem, these txns are shirking their responsibility to “add to the Monero anonymity set” – side-to-main xfers are not sidechain txns, they are mainchain txns. In this way, selling Monero for BTC contributes to Monero’s anonymity, but moving from side-to-main (or main-to-side) does not.