Rootstock’s Cryptographic and Economic Connection to Bitcoin
The brand-new podcast Rootstock Fundamentals is back for a second episode! This time, we’re focusing on the sidechain’s cryptographic and economic connections to Bitcoin.
RootstockLabs director of architecture Raul Laprida has joined us for this discussion. If you missed our debut show featuring Adrian Eidelman, you can catch up here.
Raul’s been a part of RootstockLabs since 2018 after joining from IBM — and says he was drawn to how permissionless blockchains mean anyone can participate and add value.
“It’s infrastructure for everyone,” he tells Rootstock Labs CEO Daniel Fogg. “Not just infrastructure for a particular company, a particular sector, a particular type of person. It’s an open protocol network. And with Rootstock being a sidechain, it’s enhancing the capabilities of Bitcoin.”
Listen to the full episode with Raul and Daniel on YouTube.
Lifting the lid on Proof-of-Work
Bitcoin, and by extension Rootstock, both use a Proof-of-Work consensus mechanism. Miners are responsible for securing this network and need to complete computationally difficult cryptographic puzzles in order to be chosen to add new blocks. As well as being more democratic, this approach makes it much harder to manipulate the data being added to the blockchain. Other common consensus mechanisms include Proof-of-Stake, which sees miners replaced by validators who lock up crypto and receive rewards for verifying transactions and keeping the network secure. Ethereum recently made the switch to PoS.
Rootstock is secured through a process of merged mining, which Raul likens to mining multiple blockchains for the price of one. “You don’t need to run eight or ten different Proof-of-Work mechanisms,” he explains. “You’re all anchoring the same one.”
While there are a few examples of blockchains that use merged mining, Rootstock is the biggest.
So: how does it work for miners in practice?
“Once you find the cryptographic solution that meets the criteria of the network — in this case, Bitcoin — you broadcast that to the Bitcoin network because it’s a valid solution,” Raul says. “And at the same time, you broadcast that solution to the secondary blockchain, which is Rootstock. Since Rootstock has a slightly lower difficulty than Bitcoin, it could happen that you find a potential candidate that is not good enough for Bitcoin, but it actually meets the difficulty criteria of Rootstock. So in that case, the miner is not going to broadcast that to Bitcoin, but will broadcast that to Rootstock, because for Rootstock it works.”
Other subtle differences relate to the fact that Rootstock generates a new block every 30 seconds, which is 20 times faster than Bitcoin’s 10 minutes. “When you create a new block, you get newly minted Bitcoin as a miner.” Raul explains.
Another innovation relates to the DECOR+ protocol, which stands for Deterministic Conflict Resolution. This means that, if there are rival blocks, the miner who loses the competition will continue to receive a share of the reward.
How fees are distributed
Rootstock also takes a different approach when it comes to how fees are distributed between miners. This is known as REMASC, which stands for Reward Manager Smart Contract.
“It’s a native smart contract embedded within the node that has a reward-splitting algorithm,” Raul tells us. “When a miner solves a block and the block wins, they don’t get the full block reward. That reward is going to be sent to the REMASC contract — and they’ll get a part of that bucket of money. It’s cooperative because other actors are going to get a share as well.”
When a winning block is found, there is a waiting period of 4,000 Rootstock blocks — equivalent to about 33 hours — before miners are rewarded. This is designed to encourage honesty, and ensure they act in the best interests of the network.
What makes a true Bitcoin layer 2
Raul says that merged mining does come with challenges — and it’s crucial for secondary blockchains not to introduce any additional risks to a miner’s main operation: “In the case of Rootstock, it’s very lightweight and doesn’t impact the Proof-of-Work of the miners. It’s also important to be aligned to the main objective of the primary blockchain — whatever you do must not hinder the value of Bitcoin. If you are using a competing currency as means for transaction fees, then you are competing with the Bitcoin cryptocurrency and miners might just censor you.”
Rootstock is a true Layer 2 because it doesn’t introduce an alternative native token that detracts from BTC. Instead, it offers RBTC — a smart version of the world’s biggest cryptocurrency that’s pegged on a 1:1 basis with Bitcoin — which can then interact with a range of DeFi protocols.
Merge mining: Economics and ideology
Raul says that Rootstock was very careful in selecting merged mining — and the choice hinged upon crucial economic and ideological principles.
“You have the efficiency of mining more than one blockchain with the same effort or with the same cost — and also getting something in return,” he adds. “We are aligned with Bitcoin too, and that’s very important because we are expanding its functionality. It’s not just an economic incentive, it’s ideological as well. It’s a symbiotic relationship — we are also getting something from Bitcoin, which is the security.”
Fast forward to now, and Rootstock has been embraced by a large number of miners — so much so this sidechain typically has up to 60% of Bitcoin’s hash power securing its network.
“A common misconception with Bitcoin is that it’s a completely independent, completely automated, completely static distributed computer that never needs to be updated, never has bugs — it just runs like a beautiful machine,” Daniel says. “The reality is that’s not true. There are lots of Bitcoin core contributors all over the world, often being funded by grants, trying to address challenges as they emerge. And Rootstock, of course, is exactly the same. So we have contributors both inside and outside of RootstockLabs who are working to improve Rootstock every day.”
Listen to the full episode of Rootstock Fundamentals with Daniel and Raul on YouTube — and stay tuned for more interviews coming soon on Spotify.