The PowPeg Federation has no means of “issuing more BTC”. Transferring BTC to the RSK platform is an open process. In the beginning of RSK, the RSK developers established a hard limit on the amount of Bitcoins that could be transferred to RSK, to reduce risks until the network reached maturity. Later, the limit was replaced by a cap that can be increased, but not decreased.

Bitcoin does not support smart contracts nor native opcodes to validate external SPV proofs. Part of the 2-Way Peg system in RSK requires trust on a set of notaries. In RSK, the notaries that protect the locked funds are the members of the PowPeg Federation. The PowPeg Federation members are respected community actors, such as important blockchain companies, and they also have the technical ability to maintain a secure network node. A requirement for being part of the PowPeg Federation is the ability to audit the proper behaviour of the software that powers the node, specially regarding the correctness of the component that decides on releasing BTC funds.

RSK Merged Mining

Nakamoto consensus can be proven secure as long as there is an honest majority of miners. In case of a dishonest majority, malicious miners may find cheating a rational or irrational strategy depending on assumptions on how the market and the community would react to a 51% attack. RSK is no different from Bitcoin in theory, but in practice not all Bitcoin miners participate in merge-mining, so the requirement of honest hashrate would be higher. A ad-hoc monitoring system, called Armadillo, lowers the requirement by warning nodes if more than 50% of the miners turn malicious before malicious miners can do harm.
In terms of cryptographic security, RSK merge-mining uses both SHA256 and Keccak. Since there are no known practical attacks on these hashing functions, RSK is currently as secure as Bitcoin mining. In particular RSK assumes a stronger property from SHA256, which is that, it must not allow a “freestart collision” at a cost lower than 2^80 operations. This is because the RSK network uses a property of the Merkle–Damgård construction to compress the size of the SPV proof.

Miners earn 80% of the transaction fees from every RSK block they mine. These incentives will become more and more attractive while the RSK platform drives adoption, and the number of transactions in the network increases. Since merge mining RSK does not require any additional cost to the one required to mine Bitcoin, RSK provides an additional revenue stream for the Bitcoin miners using the same hardware and electricity. More information about RSK merge mining can be found here: Merged Mining Is Here To Stay.

We are currently looking for other ways to incentivize all RSK key players -including mining pools- to better align incentives while the network is bootstrapped. We’ll keep the community posted on any update about this.

Below is a list of useful links for users willing to understand more about merged mining and setting up mining nodes:

What is merged mining

Configure an RSK node to be used from a merged mining pool

By running an RSK node, you not only check the validity of your own transactions, but also that the rules of the system cannot be changed by any minority group. Therefore, it’s in RSK users best interest to run full nodes of their own. Having said that, we’ve designed -and we’re currently developing the first decentralized system for proving you’re a full node, so in the future we’ll be able to incentivize full nodes (see our Devcon3 presentation on Proof of Unique Blockchain storage). This technology will allow the economic reward of full nodes in the future which could be used to reward RSK and Lumino full nodes.

Merge-mining is a process by which Bitcoin miners can mine both Bitcoin and RSK at the same time, with the same hardware and consuming the same electricity. RSK merge-mining uses the same cryptographic hash function as Bitcoin (SHA256).

The number of transactions per second executable on the RSK platform is determined by the block gas limit and the average block rate. The current average block rate is one block every 30 seconds. At each mined block, the miner can vote to increase the block gas limit. Currently the block gas limit is 6.8M gas units per block. A simple RBTC transaction consumes 21K gas, so the RSK platform can execute 11 transactions per second today. This limit could increase in the future as there are several improvement proposals that lower the resources required to process transactions on the RSK network.

For example, RSKIP04 enables parallel processing of transactions. If the proposal is accepted by the community, the block gas limit could easily double.

Both the LTCP protocol, as described in the white-paper and in RSKIP53, and the shrinking-chain scaling technique could result in a ten-fold reduction in the amount of space required.

If these proposals are accepted by the community, transaction speeds could be expected to reach 100 transactions per second.

Beta releases of improved RSK nodes have been tested to accommodate 100 tx/s without incident. As the technology improves, transactions per second may similarly increase. The goal of RSK Labs is to reach up to 20,000 tx/sec using its Lumino technology, which is a second layer off-chain payment network that will be embedded on RSK’s reference node in the following release.