In Bip300, txns are not signed via cryptographic key. Instead, they are "signed" by hashpower, over time. Like a big multisig, 13150-of-26300, where each block is a new "signature".
Bip300 emphasizes slow, transparent, auditable transactions which are easy for honest users to get right and very hard for dishonest users to abuse. The chief design goal for Bip300 is ''partitioning'' -- users may safely ignore Bip300 txns if they want to (or Bip300 entirely).
As Reid Hoffman [https://blockstream.com/2015/01/13/en-reid-hoffman-on-the-future-of-the-bitcoin-ecosystem/ wrote in 2014]: "Sidechains allow developers to add features and functionality to the Bitcoin universe without actually modifying the Bitcoin Core code...Consequently, innovation can occur faster, in more flexible and distributed ways, without losing the synergies of a common platform with a single currency."
Today, coins such as Namecoin, Monero, ZCash, and Sia, offer features that Bitcoiners cannot access -- not without selling their BTC to invest in a rival monetary unit. According to [https://coinmarketcap.com/charts/#dominance-percentage coinmarketcap.com], there is now more value *outside* the BTC protocol than within it. According to [https://cryptofees.info/ cryptofees.info], 15x more txn fees are paid outside the BTC protocol, than within it.
Software improvements to Bitcoin rely on developer consensus -- BTC will pass on a good idea if it is even slightly controversial. Development is slow: we are now averaging one major feature every 5 years.
Sidechains allow for competitive "benevolent dictators" to create a new sidechain at any time. These dictators are accountable only to their users, and (crucially) they are protected from rival dictators. Users can move their BTC among these different pieces of software, as *they* see fit.
BTC can copy every useful technology, as soon as it is invented; scamcoins lose their justification and become obsolete; and the community can be pro-creativity, knowing that Layer1 is protected from harmful changes.
| Intended as the sha256 hash of the tar.gz of the canonical sidechain software. (This is not enforced anywhere by Bip300, and is for human purposes only.)
|- style="vertical-align:middle;"
| 9
| Hash2 - git commit hash
| uint160
| Intended as the git commit hash of the canonical sidechain node software. (This is not enforced anywhere by Bip300, and is for human purposes only.)
D2 lists withdrawal-attempts. If these attempts succeed, they will pay coins "from" a Bip300-locked UTXO, to new UTXOs controlled by the withdrawing-user. Each attempt pays out many users, so we call these withdrawal-attempts "Bundles".
D2 is driven by M3, M4, M5, and M6. Those messages enforce the following principles:
# The Bundles have a canonical order (first come first serve).
# From one block to the next, every "Blocks Remaining" field decreases by 1.
# When "Blocks Remaining" reaches zero the Bundle is removed.
# From one block to the next, the value in "ACKs" may either increase or decrease, by a maximum of 1 (see M4).
# If a Bundle's "ACKs" reach 13150 or greater, it "succeeds" and its corresponding M6 message can be included in a block.
# If the M6 of a Bundle is paid out, it is also removed.
# If a Bundle cannot possibly succeed ( 13500 - "ACKs" > "Blocks Remaining" ), it is removed immediately.
{| class="wikitable"
! Field No.
! Label
! Type
! Description / Purpose
|-
| 1
| Sidechain Number
| uint8_t
| Links the withdrawal-request to a specific hashrate escrow.
|-
| 2
| Bundle Hash
| uint256
| A withdrawal attempt. Specifically, it is a "blinded transaction id" (ie, the double-Sha256 of a txn that has had two fields zeroed out, see M6) of a txn which could withdraw funds from a sidechain.
|-
| 3
| ACKs (Work Score)
| uint16_t
| The current ACK-counter, which is the total number of ACKs (the PoW that has been used to validate the Bundle).
|-
| 4
| Blocks Remaining (Age)
| uint16_t
| The number of blocks which this Bundle has remaining to accumulate ACKs
|}
=== The Six New Bip300 Messages ===
First, how are new sidechains created?
They are first proposed (with M1), and later acked (with M2). This process resembles Bip9 soft fork activation.
# Any miner can propose a new sidechain (M1) at any time. This procedure resembles BIP 9 soft fork activation: the network must see a properly-formatted M1, followed by "acknowledgment" of the sidechain (M2) in 90% of the following 2016 blocks.
# Bip300 comes with only 256 sidechain-slots. If all are used, it is possible to "overwrite" a sidechain. This requires vastly more M2 ACKs -- 50% of the following 26300 blocks must contain an M2. The possibility of overwrite, does not change the Bip300 security assumptions (because we already assume that the sidechain is vulnerable to miners, at a rate of 1 catastrophe per 13150 blocks).
Sidechain withdrawals take the form of “Bundles” -- named because they "bundle up" many individual withdrawal-requests into a single rare layer1 transaction.
Sidechain full nodes aggregate the withdrawal-requests into a big set. The sidechain calculates what M6 would have to look like, to pay all of these withdrawal-requests out. Finally, the sidechain calculates what the hash of this M6 would be. This 32-byte hash identifies the Bundle.
This 32-byte hash is what miners will be slowly ACKing over 3-6 months, not the M6 itself (nor any sidechain data, of course).
A bundle either pays all its withdrawals out (via M6), or else it fails (and pays nothing out).
The Bundle hash is static as it is being ACKed. Unfortunately, the M6 TxID will be constantly changing -- as users deposit to the sidechain, the input to M6 will change.
To solve this problem, we do something conceptually similar to AnyPrevOut (BIP 118). We define a "blinded TxID" as a way of hashing a txn, in which some bytes are first overwritten with zeros. These are: the first input and the first output. Via the former, a sidechain can accept deposits, even if we are acking a TxID that spends from it later. Via the latter, we can force all of the non-withdrawn coins to be returned to the sidechain (even if we don't yet know how many coins this will be).
# If the network detects a properly-formatted M3, it must add an entry to D2 in the very next block. The starting "Blocks Remaining" value is 26,299. The starting ACKs count is 1.
Version 0x01 uses one byte per sidechain, and applies in most cases. Version 0x02 uses two bytes per sidechain and applies in unusual situations where at least one sidechain has more than 256 distinct withdrawal-bundles in progress at one time. Other interesting versions are possible: 0x03 might say "do exactly what was done in the previous block" (which could consume a fixed 6 bytes total, regardless of how many sidechains). 0x04 might say "upvote everyone who is clearly in the lead" (which also would require a mere 6 bytes), and so forth.
If a sidechain has no pending bundles, then it is skipped over when M4 is created and parsed.
The upvote vector will code "abstain" as 0xFF (or 0xFFFF); it will code "alarm" as 0xFE (or 0xFFFE). Otherwise it simply indicates which withdrawal-bundle in the list, is the one to be "upvoted". For example, if there are two sidechains, and we wish to upvote the 7th bundle on sidechain #1 plus the 4th bundle on sidechain #2, then the vector would be 0x0704.
The M4 message will be invalid (and invalidate the block), if it tries to upvote a Bundle that doesn't exist (for example, trying to upvote the 7th bundle on sidechain #2, when sidechain #2 has only three bundles). If there are no Bundles at all (no one is trying to withdraw from any sidechain), then *any* M4 message present in the coinbase will be invalid. If M4 is NOT present in a block, then it is treated as "abstain".
Within a sidechain-group, upvoting one Bundle ("+1") requires you to downvote all other Bundles in that group. However, the minimum ACK-counter is zero. While only one Bundle can be upvoted at once; the whole group can all be unchanged at once ("abstain"), and they can all be downvoted at once ("alarm").
Both M5 and M6 are regular Bitcoin txns. They are distinguished from regular txns (non-M5 non-M6 txns), when they select one of the special Bip300 CTIP UTXOs as one of their inputs (see D1).
All of a sidechain’s coins, are stored in one UTXO, called the "CTIP". Every time a deposit or withdrawal is made, the CTIP changes. Each deposit/withdrawal will select the sidechains CTIP, and generate a new CTIP. (Deposits/Withdrawals never cause UTXO bloat.) The current CTIP is cached in D1 (above).
If the '''quantity of coins''', in the from-CTIP-to-CTIP transaction, goes '''up''', (ie, if the user is adding coins), then the txn is treated as a Deposit (M5). Else it is treated as a Withdrawal (M6). See [https://github.com/drivechain-project/mainchain/blob/e37b008fafe0701b8313993c8b02ba41dc0f8a29/src/validation.cpp#L667-L780 here].
Second, an M6 is only valid for inclusion in a block, if its blinded TxID matches an "approved" Bundle hash (ie, one with an ACK score of 13150+). In other words, an M6 can only be included in a block, after the 3+ month (13150 block) ceremony.
Third, M6 must meet two accounting criteria, lest it be invalid:
# "Give change back to Escrow" -- The first output, TxOut0, must be paid back to the sidechain's Bip300 script. In other words, all non-withdrawn coins must be paid back into the sidechain.
# "No traditional txn fee" -- For this txn, the sum of all inputs must equal the sum of all outputs. No traditional tx fee is possible. (Of course, there is still a txn fee for miners: it is paid via an OP TRUE output in the Bundle.) We want the withdraw-ers to set the fee "inside" the Bundle, and ACK it over 3 months like everything else.
As a soft fork, older software will continue to operate without modification. Non-upgraded nodes will see a number of phenomena that they don't understand -- coinbase txns with non-txn data, value accumulating in anyone-can-spend UTXOs for months at a time, and then random amounts leaving these UTXOs in single, infrequent bursts. However, these phenomena don't affect them, or the validity of the money that they receive.
( As a nice bonus, note that the sidechains themselves inherit a resistance to hard forks. The only way to guarantee that all different sidechain-nodes will always report the same Bundle, is to upgrade sidechains via soft forks of themselves. )
See http://www.drivechain.info/literature/index.html
==Credits==
Thanks to everyone who contributed to the discussion, especially: ZmnSCPxj, Adam Back, Peter Todd, Dan Anderson, Sergio Demian Lerner, Chris Stewart, Matt Corallo, Sjors Provoost, Tier Nolan, Erik Aronesty, Jason Dreyzehner, Joe Miyamoto, Ben Goldhaber.
==Copyright==
This BIP is licensed under the BSD 2-clause license.
