Dialogue with RSK: Why does RSK still insist on PoW when Staking is so popular today?

From Cambodia, Singapore to Hong Kong, Beijing and Shanghai, RSK has successfully completed its Asian journey in the past month. This project, which started in 2015 and went online in 2018, has never stopped on the road of expanding its ecosystem and giving back to the community.

RSK's architecture environment "RSK OS" has many elements. The RSK team introduced to Babbitt: RSK OS's architecture includes RIF Payments, RIF Data, RIF Gateways and other sections; among them, RIF Payments (payment protocol) is the top priority of the entire architecture, and its scalability is also a difficult problem that has attracted much attention. If it can perform near-real-time, extremely low-cost P2P payment and clearing functions, then RSK will be able to technically realize the vision of "providing financial services to hundreds of millions of unbanked users."

The overall RSK ecosystem architecture (RSK OS) can be represented by the following diagram: RSK is a Layer-2 development platform (relative to Bitcoin) that can deploy smart contracts; RIF is the Layer-3, which has many components, such as the RIF Payments mentioned above (and the RIF Lumino Network mentioned below is the core component of RIF Payments, which is an off-chain scaling solution in a narrow sense; in addition, LTCP will be mentioned repeatedly below, and this protocol is another important scaling component in the RIF Payments section).

Figure 1: RSK OS architecture

After years of research and accumulation of on-chain and off-chain scaling solutions, the RSK team has finally made significant progress in network expansion recently: as an important component of RIF Payments (payment protocol), the "RIF Lumino Network" was launched.

“RIF Lumino Network a third-layer solution to the Bitcoin blockchain, enables state channels for every token built on RSK increasing transaction throughput and reducing costs by orders of magnitude.”

Diego, founder of RSK, also reaffirmed the extraordinary significance of the launch of RIF Lumino Network

“The launch of RIF Lumino Network is a major milestone in our journey to build a global financial inclusion system. For RSK and RIF (RSK Labs has been acquired by RIF), blockchain scaling is an eternal proposition because it is the key to our success in serving hundreds of millions of (unserved) users, and it means breaking through the shackles of the traditional financial system.”

In addition, RIF Lumino Network will be combined with the RIF domain name system (also on the third layer) that we have launched before, and will be bridged with more expansion designs (such as Unitrie, LTCP, etc.) in the future. With the launch of Lumino Network, the RSK team accepted an exclusive interview with 8btc and provided more technical information about LTCP and the newly launched Lumino Network. As a platform developed from PoW sidechain, they also shared their views on the sidechain of PoS consensus and talked about future development plans.

The following is the transcript of the interview: Q1 8btc: The Scalability of LTCP is really remarkable, in my view, but the privacy is somehow sacrificed, what do you think about protecting the users' privacy? LTCP has very powerful scalability, but this design will sacrifice privacy to a certain extent. How does RSK consider the issue of privacy protection?

RSK: The technology of private payments is improving all the time at a never seen pace. Only the last three years we've seen the development of new more efficient cryptographic schemes such as zCash, CT, RingCT, Bulletproofs, Sonic, Sigma, Lelantus, Zether, Mobius and AZTEC. We realized about this trend in 2015 and we decided that the best strategy was to focus on having the most secure, cheapest payments and strong foundation for 2nd layer privacy solutions to be developed by third parties, and that's exactly what happened. I would have been a bad idea to use one of the older protocols, because many of them have shown critical vulnerabilities in the last year (zCoin, Monero, zCash).

The technology of private transactions is developing rapidly. In the past three years, efficient encryption methods such as zCash, CT, RingCT, Bulletproofs, Sonic, Sigma, Lelantus, Zether, Mobius and AZTEC have emerged. As early as 2015, we had foreseen this trend, and we had long believed that the top priority was to develop a network provided by a third party that could achieve secure and convenient payments while ensuring Layer-2 privacy. Of course, we have always done so. We did not consider using previous privacy protocols because these protocols have more or less exposed weaknesses (zCoin, Monero, zCash).

You can now roll out your own private ledger over RSK using Mobius or AZTEC. Also 3rd layer scaling solutions such as Lumino already provide a new layer of protection of the amount of funds transacted. It makes economic sense to let users choose the degree of privacy they want, although it's also true that to achieve true privacy the 2nd layer privacy solution must get traction so that the anonymity set is large enough.

Developers can now develop private chains on the RSK network through Mobius and AZTEC. Of course, Lumino, as a third-layer expansion solution, has provided a new layer of protection for transaction funds. From an economic perspective, users should have the space to choose the degree of privacy, but the privacy network also needs a large enough user base to operate effectively, so how to guide users and make them motivated to accept privacy options will become a big problem.

Q2 8btc：What are the major advantages LTCP holds compared to other scaling solutions?

RSK: Most other blockchains that are pushing 2nd layer solutions have forgotten that the limits of offchain scalability is given by the possible onchain transaction volume. Every active user needs to be able to perform onchains transactions to enter, top-up and settle payment channels. That's the real bottleneck. So those projects are scarifying any long-term viability of the platform by increasing the number of onchain transactions without making sure the network keeps being publicly auditable. If you cannot download the blockchain and become a full node with your personal computer, then basically the decentralization nature of the blockchain is gone. It' has become another centralized financial system. You don't trust. You verify!

Other blockchains are working on Layer-2 expansion solutions, but they may easily overlook an important fact: the scalability of the off-chain is ultimately limited by the number of transactions that can be processed on the chain. For every active user, creating a channel, closing a channel, and submitting a settlement need to be completed through on-chain transactions. This is a contradiction: the larger and more complicated the part you put off the chain, the more useless the on-chain ledger that can be audited and recorded becomes. In this case, non-full-node users seem to be drifting away from the vision of decentralization. This is equivalent to building another centralized financial system, where there is no trust, and your job is only to "confirm".

LTCP is part of a set of onchain enhancements that enable 2nd layer networks to flourish without compromising the core principle of decentralization. With LTCP you can top-up a payment channel consuming 10 bytes of blockchain space. Compared with Bitcoin, it's a 40x improvement and compared to Ethereum is a 10x improvement.

LTCP can greatly improve the performance of the chain without compromising decentralization. The LTCP protocol only requires 10 bytes to top up the payment channel, which is 40 times and 10 times higher than the Bitcoin network and Ethereum network respectively.

To summarize, LTCP does prevent other scaling solutions to be develop. On the contrary, it provides the foundation for those other solutions to be deployed without compromising decentralization.

In summary, LTCP is not a substitute for other expansion methods. On the contrary, it can make the deployment of other solutions more decentralized.

Q3 8btc：It is said that “Payment Network enabling 5000 tps was launched”, and how many users can thus be served? Could you please give a calculation process? Lumino Network can help the payment section reach a throughput of about 5000 tps, so how many users can it be expected to serve? Could you please give a calculation process?

RSK: The actual throughput of any Payment Channel Network (PCN) depends on many factors that are not technological such as the network topology created by users, the usage pattern (sellers vs buyers), amounts transacted, channel capacities. Therefore, it's not possible to simulate a PCN and predict an exact tps value. What we did was a simulation, in a controlled environment, of multiple intermediate hubs and tens of thousands of users transacting pairwise simultaneously, during a period of one day.

The actual throughput of the payment network is limited by many non-technical factors, including the topology of the user network, usage patterns (of buyers and sellers), actual transaction volume, actual channel processing capacity, etc. It is unrealistic to accurately measure a tps number. We conducted a one-day simulation test in a controlled environment. Our network, with the support of several intermediate hubs, can allow tens of thousands of users to conduct paired transactions simultaneously.

The number of active users a network can serve depends on the all the components of the ecosystem. RSK/RIF can handle a high number of active users due to strategic combination of on-chain and off-chain layers. With the technology available today, on-chain scalability alone will not let you grow past 1M active users, on any blockchain.

The capacity of active users also depends on all aspects of the system network. After strategically combining on-chain and off-chain methods, our network (RSK/RIF) can support a considerable number of active users. Of course, if we only look at on-chain expansion, the entire blockchain field cannot break through the bottleneck of one million active users.

In terms of on-chain capacity, RSK has a gas system similar to Ethereum's. Currently RSK blocks have a gas limit of 6.8M gas. Since every simple isolated transaction consumes 21K gas, the maximum payment transactions per block is 323. Currently the average block rate is 30 second, but the miners have the capability to reduce it to a minimum of 15 seconds. So the current tps is between 10 and 21 tps. However, if you do batching, you can already reach 40 tps.

In terms of on-chain performance, RSK has a gas system similar to Ethereum. The upper limit of RSK's gas is 6.8 million. Each individual transaction consumes about 2100 gas, so the maximum number of transactions per block is 323. The average block speed is 30 seconds, and miners can reduce it to about 15 seconds at most. Therefore, the current tps is about 10-21, and if batch processing is used, it can reach 40tps.

If the community accept our proposals to add LTCP (RSKIP53), storage rent (RSKIP113) and parallel processing of transactions (RSKIP04), then after the next network upgrade the number of recurrent payments peer block can double, because computation and storage costs are halved. With 100 on chain tps, we could serve tens of millions of users using 2nd layer networks.

After the community upgrades to be compatible with LTCP, storage rent and parallel processing of transactions, the cycle processing capacity of each block can be doubled because the computing and storage costs are halved. If calculated based on 100tps on the chain, with the support of Layer-2 (RSK network), we can support tens of millions of users.

Q4 8btc：As a two-way pegged, lightening network-like approach, what do you think are your unique selling points? After applying the two-way pegged, lightening network-like expansion method, what is the core competitiveness of RSK and Lumino Network?

RSK: First, you can perform even cheaper payments of RBTC than in BTC. This is because RSK onchain payments are cheaper, and therefore opening and closing of channels can happen more often and at lower costs.

First, it is cheaper to pay with RBTC. This is because the on-chain fees of the RSK network are lower, and operations including creating and closing channels can be completed faster and cheaper.

Second, because the RSK block rate is 30 seconds on average, in the case your channels are depleted and you need to top-up one of your channels, you won't need to wait ten minutes as in Bitcoin's lightning network. You can do it in one minute, if you set your transaction the fees accordingly.

Secondly, because the block time of RSK blocks is about 30 seconds (unless the channel resources are exhausted and need to be recharged), users do not need to wait 10 minutes to confirm the completion of the transaction. Under reasonable fee settings, the transaction can be completed within 1 minute.

Another advantage is that RIF Payments Wallet & Libraries are blockchain agnostic, if modules for a any offchain network are developed, it can interface with several payment-channel networks such as Lightning, Lumino and Raiden, so you can think of RIF Payments as a truly unified wallet to perform cheap payments over all blockchains.

Another advantage is that RIF Payment Wallet and Libraries are "blockchain agnostic" (compatible with everything), and they can be grafted with many payment channel technologies, including Lightning Network, Lumino and Raiden Network. You can think of them as a universal wallet that can trade any token asset at a lower cost.

Still another advantage is that because Lumino enable payments in RBTC, it's possible to bridge the Lightning network with Lumino and enable payments to flow seamlessly between BTC and RBTC.

The last important advantage is that Lumino supports RBTC payments. In other words, in theory, we can achieve seamless conversion between BTC and RBTC by bridging the Lightning Network.

Q5 8btc：Is RSK planning to include other scaling solutions in its design? (Using sharding? Beacon chain as to Ethereum？) Is RSK planning to include more scaling solutions in its design?

RSK: Our pipeline of proposed improvements (published in our RSKIP repository) include LTCP, Storage Rent, Storage Hibernation, Parallel Transaction Processing, Compact block propagation, Account abstraction, and Ephemeral Data. Once we strengthen the core with these proposals (or better alternatives) we will move to the next step our of scalability roadmap, which is not sharding, but helping on the building of more efficient 2nd layer scaling solutions. Our current means of expansion and speed-up include LTCP, storage space rental (Storage Rent), parallel transaction processing (Parallel Transaction Processing), compact block propagation (Compact Block Propagation), etc. Once we complete the code upgrade of this stage, we will immediately invest in the next stage of expansion research and practice. But we will not use sharding, we prefer to use a more efficient way built on Layer-2 (ie, the RSK network in Figure 1).

Q6 8btc: “The launch of the RIF Lumino Network is a major milestone in our path to enable a global and inclusive financial system.” Are you planning to partner with more institutions in traditional industry to implement your project? Could you please talk more in detail about your future development?

RSK: We are working with multiple partners on the DEFI (decentralized Finance Industry) space that covers from the creation of stable coins, to insurance and factoring, and we are also working with platforms that are focused on specific industries to combine these building blocks and improve efficiency of the financial sector.

We are working with more decentralized financial institutions (DEFI) to collaborate across the industry, from the creation, issuance and factoring of stable tokens. We are also working with other sub-industries to contribute to the efficiency of the financial industry.

(The first open-source smart contract platform secured by the Bitcoin Network. In addition to the RNS and RIF Lumino Networks, RIF Labs is planning to rollout additional RIF OS protocols focused on data storage, data feeds, and secure communications in the months ahead. ) Just as we launched RIF Name Service and RIF Lumino Network and started to provide Directory and Payment services, we are working to release implementations of the other 3 Protocols of RIF OS (data storage, data feeds and secure communications) and we are planning to have the first integrated suite of the RIF Protocols by the end of the year.

We (RSK) are the first platform that can deploy smart contracts and is bidirectionally anchored to the Bitcoin network. In addition to the protocol components that have been completed (including the domain name service, RNS, and RIF Lumino Netowrk), we will also explore data storage, data feeds (oracles) and secure communications in the future. Hopefully, we will be able to complete a full set of RIF protocols (complete the third layer) by the end of the year.

Q7 8btc：What do you think of recent market? The rise of price of Bitcoin? Will the trend continue? How does RSK view the recent market, including the surge in Bitcoin? Will the market continue to rise?

RSK：Bitcoin goes through phases of expansion triggered by adoption events, followed by speculation which then gives way to strong adjustment and then lateralization for a few months to a couple years, where builds new bottoms. I don´t think we have hit yet a new adoption wave so very likely the price will adjust in the months to come. I don´t think we have hit yet a new adoption wave so very likely the price will adjust in the months to come.

Q8 What do you think of the recent 'star projects', like Cosmos ? Do you have some other opinions toward other PoS side chain projects (like Wanchain) ?

RSK: I think the Cosmos team has done an amazing contribution to the research and development of PoS and deserves the recognition.

I think the Cosmos team has made outstanding contributions to the research and development of the PoS mechanism, and they deserve more attention.

I think PoS will find its place for certain uses cases but in terms of protecting the historical information on a Blockchain, PoW remains as the absolute winner in terms of economic security and independent validation.

I think the PoS mechanism will definitely find its place in some application scenarios, but in terms of protecting on-chain information, PoW is undoubtedly the king.