Reply to "Understanding Sidechains"

I wanted to write a reply to this for a long time, because the presentation does seem a bit one-sided

Here are my points.

  1. Clearly, there are two camps, some people like blockchains and do not like non-blockchains, some people like non-blockchains and do not like blockchains. I personally belong to the former.

  2. The term sidechain is meaningless. There are blockchains, and the future is imo an internet of blockchains.

  3. Satoshi Nakamoto created an incredibly secure system resilient to government intervention. People used BTC from the beginning to avoid and fight the government (for instance to sell weed on the Internet or to sell porn). People use Ethereum to avoid and fight the government. KYC/ML is a pretty unfair, bad, and racist thing. Try to pass KYC/ML if you have an African passport. This is how much black lives matter.

People who dislike KYC/ML and want to exchange ETH for USDT go to Uniswap. The world’s financial system is deeply unfair to the entire continents of people that have no chance. These people see crypto as a solution. And they want a high level of anonymity and decentralization

  1. We all hope that PoS can be as incredibly resilient and secure as PoW. At the moment, we are very early in making this happen. If a friend of mine asks me for advice about moving $10K from PoW to PoS I would tell him to move $100, wait a month and move another $100.

ETH is moving from PoW to PoS. BTC is not. There are bad and good things about PoW and PoS. Yes, the burning of electricity is a bad thing. But the problem is much more complex than simply good PoS vs bad PoW.

  1. Centralization is a big potential threat to PoS. Validators are known, they are vulnerable to government attacks and, what matters the most they are for-profit organizations.

  2. Only the actual control matters. One million PoS agents can be executed by a single party. Therefore, talking about zillions of agents a particular PoS network runs is meaningless in my opinion. Moreover, when people that know that this metric is meaningless keep on bringing it up, I personally start questioning the motives.

  3. There is no PoS network in the world in my opinion that has effective decentralization score of more than 100 parties.
    I am happy to see many independent small parties join PoS networks, but in my estimate, they do not control significant stake. Happy if someone comes up with statistics that prove otherwise.

  4. All the above means IMO that PoS great future if it improves, and it will inevitably co-exist with PoW. PoW will probably never die, and ETH1 will never die in some shape or form. When the time comes, some miners will simply remove the time bomb and keep on mining. There is absolutely nothing wrong in my opinion. Let all flowers bloom.

  5. Coming back to PoS. Centralization tendencies are pretty obvious at the moment, but I am sure when things become too centralized. the community will find a way to fight back One promising and simple way we see at SKALE is using amendments to GPL to enforce decentralization (we call it DGPL). That’s why by the way GPL is so much better than Apache. Apache is not a copyleft license, it is a tool of a corporate world.

  6. When the community of validators around the world reaches a reasonable level of decentralization (I am sure it will eventually happen because lots of people will refuse centralized systems), the level of decentralization will be pretty much the same for all blockchains. We clearly see it at SKALE where most validators that validate ETH2, validate Algorand, Graph, Filecoin, SKALE, and the rest. Due to the nature of validator business, the business is geographically segmented. If you are in, say, Finland and validating Algorand, you will want to add all other reasonable networks. Same for investors that want diversification.

This is a very strong convergent trend that makes the security of networks comparable.

Clearly, ETH2 is the leading project and it will have more small validators than the rest. But the security of other major projects will not be drastically less than the security of ETH2. That’s why the notion of a sidechain makes no sense. The world of tomorrow is an internet of blockchains, plus some other networks like storage. There will be no Uberchain and unterchains. .

That’s why notions of layers, sidechains, non-custodial vs custodial, are meaninglessly flawed. They just do not represent the reality of the world.

This is my main objection to the line of thought cited above - the line of reasoning does not represent the future.*

The world of tomorrow will be internet of secure blockchains and not a single Uber-chain with a strange set of layers.

Simple things are better than complex ones, and if something can be done using simple architecture there is no need for a complex one.

Every single thing in Web3 can be accomplished using the internet of blockchains.

Satoshi Nakamoto by the way clearly understood this .
I have re-read Satoshi’s messages recently. He wanted many blockchains and he wanted to use merge mining for this.

Other smart projects like Polkadot, Dfinity, Algorand understand it too, the camp of people that believes in the Internet of blockchains is big and growing.
I think rollups may also have a pretty significant market share. In some cases they can be very useful. After all, theoretical constructs are a bad way to predict what people will actually use.

We will see in 2021 how this plays and what users decide. There has to be a reasonable discussion since no single party has a monopoly on truth.


Merge mining is a very creative solution to the “other chains than bitcoin” but its slightly flawed in that the hash algo used needs to be the same on both chains.

You speak ill of sidechains then say “Other smart projects like Polkadot,…” but polkadot is a hive of sidechains!

I agree that sidechains are pretty useless, why not just make your own blockchain at that point if going thru that significant effort.

I think the reasons we have so many blockchains is more investor interest rather than tech. Tech wise wouldnt it be the most secure if we all merge mined / rolled up on bitcoin or even eth(2) for that matter? (for green energy debate). NO how does the investors make money like that!??

So to make money you need to issue a 30-50% of the coins around genesis / project inception at fragments of a penny, that’s where the money is, no one cares about security. They care about money.

Cant issue 30-50% BTC… hum… il just go make my own chain!

But yea I am more and more interested in sidechains and rollups, currently have something at brainstorm stage but it seems it would compete with SKALE.

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Well :))

The way we see things at SKALE the world needs to move fro Web2 to Web3.

Polkadot and DFinity in particular have a similar understanding of how the future is going to play. Each web2 site needs to transform into a blockchain.

There are no sidechains. There is an internet of blockchains :slight_smile:

An architecture where there is a single Uber chain is not going to win IMO because there no need for this. Blockchains can directly talk to each other.

There is 1 problem with polkadots appoach. Nodes. No one wants to host nodes (for their sidechains/blockchains), thats a PITA, things go down, networks are unstable. Physical cables get cut due to people looking for minerals in the ground with drills.

There is an internet of SHARDS is how we see it. Not necessarily blockchains as blockchains imply nodes.

Shards can directly talk with eachother. The difference is just how much can you stuff into a shard, and with WASM we think a lot (example performing WASMSNARKS in the contract) once you are not limited to solidity.

Well … I agree that having people run their own blockchain is a weakness. At SKALE the SKALE network runs all chains.

Another reason why I personally do not favor Polkadot, is because the architecture includes an Uberchain everyone connects to. Internet does not have an Uberserver, why should blockchains have one?

Having said this Polkadot has a great team and pretty reasonable vision of the future.