Quick comments and summary on the #drivechain discussion between Paul and Shinobi yesterday
Shinobi's argument: It's easy and riskless to reorg the sidechain, so this will happen, perhaps frequently. This is not disruptive to the L1 chain. Therefore there will be a significant discount between the bids for the sidechain block and the nominal value of the sidechain block. This induces L1 miners to obtain the blocks directly, instead of accepting bids from sidechain miners, which are deeply discounted.
Paul: OK, fine, but the discounted value of the block should be near the opportunity cost, so not a huge difference.
My comment: Actually, the discounts and risk of reorg are quite different depending on whether you are an L1 miner or a sidechain miner, have more hashrate than other miners, are willing to collude with other miners, or have deep pockets in to destroy opponents in a dollar auction or war of attrition. Larger corporate miners or coordinated pools have a distinct advantage and can be more aggressive and less defensive in reorging the sidechain.
Shinobi: Now L1 miners who mine the sidechains get a premium over those who are accepting bids. This gives these miners a distinct advantage. In particular small-time miners are unable to run a sidechain node will be left out economically speaking, which tends mining towards centralization.
I didn't quite follow Paul's response, it seemed to me like he was saying, "well that's just how it works" and not recognizing that this would be pushing smaller miners underwater, and that this is a bad thing.
micah541 / Micah541
npub1ws…vxzeg
2023-09-02 19:38:40
Author Public Key
npub1ws69pst0kcaqa9cgm85l3xzkqrfuphldu5dv6r5cp8tjjzfyv82s5vxzegPublished at
2023-09-02 19:38:40Event JSON
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"content": "Quick comments and summary on the #drivechain discussion between Paul and Shinobi yesterday\n\n\nShinobi's argument: It's easy and riskless to reorg the sidechain, so this will happen, perhaps frequently. This is not disruptive to the L1 chain. Therefore there will be a significant discount between the bids for the sidechain block and the nominal value of the sidechain block. This induces L1 miners to obtain the blocks directly, instead of accepting bids from sidechain miners, which are deeply discounted.\n\nPaul: OK, fine, but the discounted value of the block should be near the opportunity cost, so not a huge difference.\n\nMy comment: Actually, the discounts and risk of reorg are quite different depending on whether you are an L1 miner or a sidechain miner, have more hashrate than other miners, are willing to collude with other miners, or have deep pockets in to destroy opponents in a dollar auction or war of attrition. Larger corporate miners or coordinated pools have a distinct advantage and can be more aggressive and less defensive in reorging the sidechain. \n\n\nShinobi: Now L1 miners who mine the sidechains get a premium over those who are accepting bids. This gives these miners a distinct advantage. In particular small-time miners are unable to run a sidechain node will be left out economically speaking, which tends mining towards centralization.\n\nI didn't quite follow Paul's response, it seemed to me like he was saying, \"well that's just how it works\" and not recognizing that this would be pushing smaller miners underwater, and that this is a bad thing.",
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}