The Rootstock (RSK) network was proposed in 2015 by Sergio Lerner, Chief Scientist of RSK labs. The aim of RSK labs is to bring accessible, low cost financial services to billions of human beings around the world who don’t have adequate financial services.
RSK is a unique project because it’s dependent on Bitcoin (BTC) for security and is not its own independent blockchain like an Ethereum or EOS. RSK is a species of network known as a side chain.
A Bitcoin sidechain allows a holder of BTC to lock up funds in the Bitcoin mainchain and be credited the same amount in a BTC sidechain. The native asset of the sidechain can then be used within this network, and can later be exchanged back into the original units of BTC.
A user might do this if they think they can get additional functionality in the sidechain that they couldn’t get in BTC’s mainchain. Keep in mind that there is no actual exchange of assets going on. BTC does not actually move to another network.
For example, if a holder of BTC wants to use their assets in the RSK network, they would lock up their BTC in the Bitcoin blockchain, and an equivalent amount of RSK’s native asset, RBTC, will be released for use on the RSK sidechain. Sidechain assets like RBTC are pegged to Bitcoin, meaning they should be near equivalent value. In the RSK network one locked up BTC will yield a user one RBTC and vice versa. There is no exchange rate like the one you’d find between BTC and LTC.
Many in the Bitcoin community like sidechains because they allow developers to experiment rapidly and extend the functionality or capabilities of BTC indirectly without there needing to be a major change to the mainchain, which can be very contentious. Developers are free to add almost any feature on a sidechain they might want in BTC,and transfer their BTC into the sidechain to take advantage of those features.
The RSK network anchors to BTC’s security by leveraging a technique called merged mining. Merged mining is the act of mining two or more crypto-assets simultaneously, without sacrificing the performance of the miner or adding any material costs.
A BTC miner can use their computational power to mine blocks on BTC and RSK concurrently and earn new supply and transaction fees on each chain with only a small increase in cost.
The thinking behind merged mining is that the work done on one blockchain can be used as valid work on another chain. RSK takes full advantage of this concept.
As of December 2018 more than 35% of the BTC hashrate is mining both BTC and RSK. That’s a considerable amount of hash power compared to other altcoin networks that rely on Proof of Work mining.
The RSK network is primarily run by a group of quasi trusted members whose membership is determined by the member’s social reputation and technical ability. Many notable blockchain companies around the world are a part of this federation.
Since BTC miners are providing security and processing transactions, the sole purpose of this Federation is to secure the two way peg between BTC and RBTC. This is no easy task since the BTC mainchain has no awareness of the RSK sidechain. “Moving” back and forth can be quite tricky since nothing is being transferred across chains. The movement back and forth can instead be thought of as a series of locks and releases. This requires users to place trust or faith in this federation to operate the peg properly, securely, and honestly.
In order to use the RSK network or create RBTC, holders of BTC need to lock up their holdings in a special multi-signature wallet controlled by this Federation. Once BTC has been sent to this multi-signature wallet, the Federation will release the equivalent amount of RBTC for use on the Rootstock network.
When a user wants to exit Rootstock and reclaim their locked BTC, the Federation will lock up the previously released RBTC and at least 51% of the Federation will have to sign off on the release of BTC back to the original owner. Once that majority signature threshold has been met, the same BTC that was locked up previously will be returned to the owner.
Smart Contracts on BTC
The Bitcoin blockchain has a limited set of operations and functions it can perform. There is usually a tradeoff between functionality and security and the Bitcoin project has opted for security at the expense of more general functionality. The BTC development community is generally extremely conservative when adding new features compared to other projects who aggressively extend the functionality of blockchains. But in doing so, many may have opened up more security issues. More functions generally lead to a larger attack surface or increase the possible number of scenarios one has to take into account when assessing security.
RSK sidesteps this trade-off by leveraging the incredible security provided by Bitcoin miners and building a complementary network that dramatically extends the capabilities of what can be done with BTC the asset. RSK effectively separates the security and functionality tradeoff allowing BTC to keep its small attack surface while giving holders of BTC more functionality in a separate network.
RSK enhances the usefulness of BTC by providing the Turing-complete Rootstock Virtual Machine (RVM), which allows complex smart-contracts to be constructed and utilized. The RVM is highly compatible with Ethereum’s Virtual Machine, meaning whatever can be built or has been built on Ethereum can be built on RSK. Any and all dapps and assets on Ethereum can be recreated on RSK with the security of the Bitcoin network.
Some potential use cases of RSK:
- Escrow Services
- Crypto-Asset issuance (tokens)
- Non-fungible tokens
- Decentralized exchange
A Drivechain future?
One of the current vulnerabilities of RSK is the integrity of its peg. Locking and releasing assets on separate networks in which one network knows nothing of the other’s existence is a sensitive process. Although users don’t depend on a central party to maintain the peg, they do rely on the Federation for its integrity.
The developers of RSK have proposed a hybrid solution that would reduce the Federation’s monopoly on the responsibility for releasing locked assets on the Bitcoin blockchain. The solution they’ve proposed is a mechanism called Drivechain, developed by long time Bitcoin researcher Paul Storzc.
This mechanism is highly technical, but at a high level Drivechain would involve the RSK merge-miners in the process of releasing locked funds instead of it solely being at the discretion of the Federation. This would distribute responsibility for the peg, securing the peg from possible malicious behavior within the Federation.
However, the Drivechain solution would require a Bitcoin soft fork which may or may not happen. If you are interested in Paul Storzc’s Drivechain solution he has an excellent website describing what it is, its benefits, and some of the criticisms that have been lobbed at it.
RSK labs has made great strides in developing a smart contract platform secured by the Bitcoin network. We’re excited to support RBTC on our platform and look forward to its continued development. Be on the lookout for RSK token support on the Edge platform in the not too distant future.