Bitcoin sidechain RSK chain launched a new bridging protocol called Powpeg, which will facilitate a reliable connection between Bitcoin (BTC) and its packaged version of RSK, called Smart Bitcoin (RBTC).
The system marks the first time a trusted stick has existed on a Bitcoin side chain, as the funds allocated to the chain are not controlled by a group of well-defined entities, often called a consortium.
Powpeg achieves this by combining the security features of a Hardware Security Module, or HSM, with an RSK consensus set based on the Bitcoin Fusion Rebuild. RSK co-founder Sergio Lerner explained the concept to Cointelegraph:
“In Powpeg, even most Powpeg supporters or signers cannot sign a bitcoin peg transaction without a great deal of chain work that only most RSK miners can provide.
This mechanism is part of RSK’s defense in depth strategy to provide more layers of security and protect the system from various types of attacks.
In particular, Lerner said that federal systems, in which certain legal entities have the authority and responsibility to keep the bridge functioning, “are under government control.” With Powpeg, this is no longer an option, as organizations cannot control funds in a multi-signature bridge contract. Performing a transaction to withdraw this money would require most of the RSK hash rate, which alone accounts for over 50% of all bitcoin mining operations.
With the final implementation of Taproot, the system can also be expanded to any number of bridge maintenance professionals, including individuals. This would further reduce the weakness of attempts to seize power, Lerner said. He said selective oversight is also impossible, because all outgoing transactions are automatically linked to each other.
As part of the defense doctrine in depth, Lerner mentioned additional pin mechanisms to increase stability. Some of the possible approaches include the introduction of more unions, a significant increase in the number of signers, and a fail-safe multiple signature system that gets activated if Powpeg stops working.
Building a robust bridge mechanism could enable Bitcoin holders to take advantage of the RSK smart contract platform. The project expanded its DeFi ecosystem, which now contains major building blocks such as the Securities Lending Protocol and many forms of decentralized exchanges.