Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Adrian Eidelman: RSK – The Bitcoin-Based Smart Contract Platform

Episode Date: April 19, 2021

Bitcoin just got smarter. This episode is brought to you by RSK, the Bitcoin-based smart contract platform leading the DeFi for Bitcoin revolution. Be part of the future while building your personal wealth with the Bitcoin you already have. RSK is a secure smart-contract platform that enables decentralized applications secured by the Bitcoin Network to empower people and improve the quality of life of millions. The platform incorporates a Turing Complete Virtual Machine to Bitcoin. RSK believes that new use cases are necessary in order for Bitcoin to become the leading global cryptocurrency, and that adding smart-contract capabilities is key to secure that future. It also provides other enhancements to the network such as faster transactions and better scalability, features that they also believe will enable new usage scenarios.We chatted to Adrian Eidelman, Co-founder of RSK, about the vision they have for the project, how it works on a technical level, and how you can become involved.Visit rsk.co/openfinance to find out how you can put your Bitcoin to work.Topics covered in this episode:The journey of RSK since they were last on the show 5 years agoThe vision they have for RSKThe building blocks of the projectRSK's 2-way pegHow merged mining worksRSK's compatibility with EVMProjects being built on RSKHow you can get involvedEpisode links: WebsiteDevelopers PortalPublic Slack WorkspaceGithubPublic community discussionsRSK on TwitterAdrian on TwitterThis episode is hosted by Sebastien Couture. Show notes and listening options: epicenter.tv/B005

I'm here with Adrian Eidelman. He is co-founder of RSC Labs. So we had RSK on the podcast about five years ago. So it's been a really long time. And I'm sure that most of you probably don't remember that episode. Some of you probably weren't even listening back then. But nonetheless, we're excited to have RSK on again because there's lots of been happening in the RSK ecosystem. And also, I think like it's, we all.

We often cover projects in the smart contract platform space that are like around building on Ethereum or like building on, you know, newer blockchain platforms. And there's only, you know, so many projects that are trying to do this sort of like scalable smart contract platform on top of Bitcoin. Of course, we had stacks on just recently. And RSK is one of those projects that's been around for a long time. So we're speaking with Adrian today about the vision for SK. what has been going on in the project for the last five years since we all last had them on. And we'll also get into the technology. So Adrian, thanks for joining me today.

Thanks for inviting me. I'm very happy to be here. So it's been about five years. Like I said, we had Sergio Lerner on about five years ago. So what's been the journey for RSC since then? Like, how has the project evolved? And maybe tell us a little bit about.

about the organization that acquired RSC labs and so what that means for the project? Yeah, yeah, absolutely. Actually, five years ago, it's more or less the time when we started to build RSK. So definitely a lot of things have happened since then,

not only in RSK, but the whole crypt of space for sure. And, yeah, well, basically, when we started working five years ago with the vision of building on top of Bitcoin, as you said, and basically bringing smart contracts to Bitcoin, that was our main goal at the beginning of the project in 2016. And well, basically, after that, we put our heads down in building the basic. building blocks of the RSK platform, of the RSK side chain.

And we launched the Mainnet in early 2018. So RSK, also commonly known as Rootstock, was launched three years ago, and it's been in Mainnet working since then, right? And we are still working on RSK. there's a lot of stuff to do and the ecosystem has grown a lot and there are other very important players contributing to the platform and to the ecosystem and yeah we have also started working on different layers on top of RSK all of them looking for building more decentralized technologies for other projects or other entrepreneurs to to build decentralized.

applications on top of Bitcoin, right? People who have been in the space long enough will remember that, you know, back around 2014, 2015, you know, there was, there were like a few projects that were trying to build on top of Bitcoin and like one that I remember and that I think a lot of people from back then remember was counterparty.

And then like RSK, I think, had like a very different vision and approach. So like Counterparty was trying to build like a token system essentially using like Bitcoin operturns. And so like it had to parse the entire blockchain. And like that that didn't, you know, there were some early projects that were trying to use that. And it, you know, it didn't really play out. Of course, there was colored coins as well. And like RSK had more like broader ambitions to build a smart contract platform on top of Bitcoin.

You know, early on like where did you see that RSK could bring value compared to some of these other. projects that were trying to like build platforms up on top of Bitcoin and like what was the long-term vision here back in in 2015 and probably even before that some well you mentioned Sergio he was already working on this idea of smart contracts and in the idea of a true incomplete virtual machine that's like it's much richer in terms of the possibilities that it gives to developers and yeah and people developing on top of this of the smart contracts platform so back then of course in 2015 we had a Ethereum launch and like the yeah the richness of the of the possibilities for developers were much much broader and much

my powerful than the projects you mentioned before. So yeah, we like that approach, but we had the vision at that time that this had to be built on top of Bitcoin, right? Because Bitcoin, well, also five years ago, it's now probably much more clear, but it was already the most secure platform. and has several years working with no big issues. So although we loved what Ethereum was proposing back then, we were sure that that had to be built on top of Bitcoin, right?

So that's why we envision this idea of building a side chain, right? So RSK is basically a smart contracts platform. It works similar to what Ethereum is. however, you need Bitcoin to transact. You need Bitcoin to pay for the transaction fees to deploy a contract, to execute a contract, to transfer native tokens. Yeah, I think that was the key in the vision we had, and probably different from the approaches you mentioned before

and thinking about an independent blockchain where you need Bitcoin to transact. And that we think it's like one of the best ways to have Bitcoin evolve, right? And the vision we had in mind was basically about building a more inclusive financial system. Now it's like probably more common in terms of how the DFI movement evolved. But back then, without using the term. Defy Open Finance, we were already thinking about this idea of decentralizing the financial system, especially coming from Latin America where that needs so clear and visible to

anyone living here. But we knew at that moment that we needed technologies that could enable developers to build, as I said, like more richer, yeah, solutions. And that's where we kind of try to bring together this idea of smart contracts and Ethereum and building on Bitcoin. And that's where we started working on RSC. But always with the vision of making a more decentralized financial system. Yeah, I think that's one of the things that permeates through,

my conversations with people who are either from or have lived or worked in Latin America is that, you know, there's, there's really like a visible need, a tangible need to, you know, to build and work on these systems. And I think like the most recent conversation that I had with Camille Russo, you know, she talks about this in her book and she also talked about during the podcast. It's like, you know, one day she could, you know, trade her, her, her arched. Argentine pesos for dollars and then the next day she couldn't. Yeah. And this is like...

Yeah, it's hard for people here. Like having to deal with all these like limitations, as you said, not only being able to get access to, as Camilla said, American dollars, because the Argentine pesos is like, there is an inflation of 20% to 50% every year for the last 15 years. So basically you get pesos and you need to act quickly before they get depreciated, right? So that's why there is a big community here in Latin America around Bitcoin because it's been a way for people to escape or minimize these obstacles they have had

what and they actually have today. And that's why, like, and many people, even without access to any financial service, like to a bank account, to the possibility of having their money safe in a bank account. And, I mean, it's like a very basic needs that even here we usually don't see, but if you, like, open your eyes a bit, you will see it clearly. Bitcoin and all these decentralized technology play a very important role in making a more decentralized and freer world. And in the last five years, you know, since you guys have been working on RSK, have you been

able to, you know, observe some like tangible benefits that, you know, people in your surroundings like in Argentina and are like your old? also living in Uruguay now, have you been able to observe tangible improvements that Bitcoin and just generally, you know, decentralized technologies with, you know, Ether, Ethereum, whatever, have been able to bring to people's lives? Like, has you seen, like, sort of tangible benefits to people, perhaps, like, outside the crypto space, you know, like the non-crypto nerds? Yeah, yeah, I think it's, we're still in early stages of this.

Like, saying that it has changed the world, the life of, of a significant amount of people. I wouldn't say that's true. Maybe it's where we are going. Because when you see all this DFI movement, we found very interesting. Still, the users are probably not the ones in this, facing these problems I mentioned before.

However, yeah, you can see people going to, Bitcoin. You can see people trading Bitcoin probably in slams in Buenos Aires and other places. Like I talk mostly about Latin America because it's where I am and it's where I can see like this more clearly. I'm sure this probably happens in other places also. But yeah, you can see that. You can see people go into stable coins to try to protect their money and their value before it gets, as I said, depreciated. I think it's growing a lot. I wouldn't say it's massive yet.

People get very creative here about how to escape all these controls and limitations. So, yeah, for the last few years, you've seen people go to Bitcoin. And even though it's like, as you know, it's volatile, it's even much better than sticking to, like, the local currency. And yeah, I think we will see that becoming bigger with time, but you can already see that happening. So, yeah, there is a big Bitcoin community in Latin American. I think it's not casual. I mean, it's not something that happened because it was something random, but basically because all this,

the reality that people face here. But again, I think it's not like something massive yet, but I think we will see that growing a lot in the following couple of years. So let's get into the meat of things here. Let's talk about RSC and we want to dissect the technology and all the different aspects of how RSK works. We want to talk about the peg to Bitcoin.

Obviously, RSC leverages merge mining, so we can talk about that. There's this unique mechanism called POWPEG, which we should also get into. But first, you mentioned earlier the building blocks, the RSK building blocks. Let's maybe, you know, for our listeners, like, draw a picture of what those building blocks are and how they interact with each other at the high level, and then we can kind of like drill down into each of them. Yeah, sure. So, like, in an actual, there are like, as you say, it's a few building blocks that are the ones that, yeah, it's important to mention, to understand RSK, right? First of all, RSK is an independent platform.

It's not, like, working using the Bitcoin Protocol. it's an independent platform, it's an independent network, it runs its own nodes. And all of these nodes run a client implementation for the RISK protocol, which basically or mainly runs an eBM compatible virtual machine so that it's able to run and execute smart contracts. In that sense, it's similar to Ethereum. but then there is a couple of strong connections with the Bitcoin network and that's why we call it a side chain right

the first one as I mentioned is that the native token for RSK it's Bitcoin there is no other newly minted token or other native token for RSC and that's basically achieved through a breach and usually called a two-way peg between Bitcoin and ArisK. It's the technology that let users transfer their bitcoins from Bitcoin to the RSC blockchain so that they can transact and do everything within the smart contracts platform. And of course, they can do the other way around, like taking their Bitcoins on RISK back to Bitcoin and get their bitcoins back on the Bitcoin blockchain.

So that's one of the most critical components and most important. The other link with Bitcoin, as you mentioned before, is the merge mining, like the consensus mechanism for RSK, which is basically merged mine with Bitcoin. So those two strong connections with Bitcoin, it's what makes RSC in our mindset of seeing RSK as a whole as a smart contracts layer on top of Bitcoin, right? We see as Bitcoin as a layer one or layer zero, like the store of value layer, and on top of Bitcoin RSK, where you can get access to all the benefits of a smart contracts platform, as we usually know.

One of the things that I think is important to mention here is that RSK is an EVM compatible blockchain. So that means people can deploy any smart contract that they would have written in solidity for Ethereum. They can deploy on EVM.

And then the other interesting thing is that RSK uses Bitcoin as its native currency. So in order to use RSC, pay fees. For instance, you have to move Bitcoin into the platform. And RSK achieves this

by a peg, by way of a peg. And we'll get into the peg functionality. So I'm looking at this diagram here that I think really kind of sums up the different components of RSC really well. And so, you know, you have people that are using the platform, right, like what we might call economic actors. And they're interacting with RSC primarily, well, at first, I guess, through this bridge contract. So they would send Bitcoin to the bridge contract, and that would allow them to get RSC Bitcoin or some might call them like RAPT Bitcoin somehow on the RSK platform, and that allows them to interact on the RSK platform. But then there's these other actors. So we have miners, and miners are participating in a marched mining protocol.

then we also have the the powpeg nodes and powpeg nodes are running in HSM and we'll get into the details here but I think what these nodes are doing are holding the Bitcoin that are in the bridge contract. And then we have these armadillo nodes and it's not so clear to me what the armadillo nodes are doing, but we can get into the details here. So, you know, let's unpack this picture and maybe describe how all these participants are working independently and, like, how they work together to form, you know, the RSC security model and then, of course, like, executing smart contracts. Yeah, exactly. So the actors you mentioned are the most important ones. We get to Armadillo. It's actually something like it's more like secondary, but an important component in RSK.

but probably not like at the most important level of understanding what RSC is. So, yeah, so you mentioned that the mining pools, yeah, the mining pools are giving like the economic security to RSK through merge mining. Basically, merge mining is a technique by which using the same hushing power and using the same hash rate. miners can secure two blockchains at the same time, right? So basically by reusing the shares or the jobs, that's the actual miners. I mean, the hard word sends to a mining pool. And in our case, the primary blockchain is Bitcoin, of course, and the secondary blockchain is RSK.

and yeah basically these mining pools can since RSK is mine at a lower difficulty than Bitcoin, all these shares that the mining pool receive because the actual miners, the hardware are asked to send shares or jobs at a lower difficulty that it's needed to mine Bitcoin. Those shares can also be used to mine RSK. So basically, RSC, as you said, it's a merge mine platform and using a proof-of-work consensus model, right? So the same, again, the same mining pools mining Bitcoin can mine RSC at the same time with no additional cost and with no impact to their Bitcoin mining operations. And basically, the benefit for them is that they will get Bitcoin. that comes from the transactions fees that are paid on RSC.

Currently, well, it goes up and downs, but on average in the last couple of months, there's been around 60% of the Bitcoin hashing power securing the RSK network. And I would say that the top Bitcoin mining pools are contributing to the platform to, to protect that. So it's, we're like very, very happy to have their support because it's, it's a massive amount of caching power and makes that the smart contract platform like

very, very secure in terms of a 51% attack, right? Regarding the, you mentioned the POPPEG and the signatories of the POPPEG. Basically, a POPH is a name that we've given to the evolution. of the RSK two-waypeg with Bitcoin, right? So when RSK was launched in 2018, of course, there was a two-way peg available. There are several ways to achieve a two-way peg, to achieve this bridge mechanism that any side chain needs to have to transfer Bitcoin back and forth between the two chains, right?

basically we evolved through different security models and the last one is what we call the Paupé right it's the latest security model for the two-way pair at the beginning when we when we launched R SK in 2018 the model was different it was like mostly like a a hybrid SPB federated peg, right? It's basically a federated bridge where there are a set of functionaries that participate in a multi-signatory custody of the assets, in this case of the Bitcoins, right? And with evolved into this POPEG version

where there are, as you mentioned, H-SEMs involved. and one of the characteristics of the power peg is that these HSMs are doing a proof-of-work validation of the transactions of the commands or the request that the power HSMs, as we call it, receive, right? So this like drastically improves the security, like going from this hybrid SPB federated model where these Federation members have control

over the keys that have access to the funds and when I say the funds I mean the bitcoins that get locked

in the Bitcoin blockchain to this new model where the keys are inside this HSN this hardware

security device cannot be taken or access to get them out of the device and basically this SITSM will only execute transactions, payout transactions,

when they are coming from the bridge contract and when they have enough proof of work and going back to the Merchmining explanation since there is around 60% of the Bitcoin hashing power, it's really, really safe to have the keys and the pegouts commanded by this HSM. So that's what has changed drastically in terms of security between the original two-way peg in 2018 and now the pole peg version that we have recently launched. So can you maybe go into detail as to how it's more secure? because or maybe maybe just it helps just to remind to give a reminder of like how a federated peg works and then how the proof of work peg improves upon it because I'm not like quite clear

there on how that works so yeah absolutely so from from the user perspective maybe it's easier to understand it from the user perspective so you have bitcoins that you want to move them to RISK, right, to have your Bitcoins used in a, like, DFI protocol or to build your own smart contracts or wherever you want to do on RSK. So you start by with the need of having Bitcoins on RSK, right? There are different ways to get Bitcoins on RSK, but the native one is by going through this two-waype, by going through this bridge. So users, what do is basically send their Bitcoins to a market.

multi-signature in Bitcoin to a multi-signature address in Bitcoin. And, well, at the end of the process, they get Bitcoins on RSC, right? The kind of magic that happens between sending your Bitcoins and getting your Bitcoins in RSK, it's what the two-way peck does, right? So these are Bitcoins that are logged in a multi-sig, those keys for the multisigua are controlled. I'm talking about the original model in 2019. I controlled by what we call members of the federation.

They are running an RSC node with some additional capabilities. And basically, they have control of one of the keys of the multisignature. And so they play an important role in releasing the Bitcoins when the users want to go back from RSK to Bitcoin, right? So when users want to go back to RSK from Bitcoin, well, there is a bridge contract. It's a smart contract living on the RSK blockchain that basically orchestrates all this flow

with taking care of validating different things, that there are enough confirmations on RSK, and there are, well, a bunch of validations that need to be done, but when everything is like, okay, they will ask each of these federation members to sign the release transaction, right? And each of these federation members holding a key for that, they will sign it and the bitcoins will be released. The problem with this approach is that basically it's what I have already said, is that

each member of the federation has control over this, one of the keys of the multisignitar. So in this model, the federation members could collude. to get access to the Bitcoins that have been locked, right? So if those funds are lost, then you will not be able to go back to Bitcoin, using your Bitcoins on RSK. We've evolved that. First of all, we get to a stage

where we started to use HSMs. That was like a couple of years ago. basically these signatories move to securitizing the keys inside an HSM, like similar to a hardware wallet that anyone uses, where it has a secure element. So like it's pretty much safe and almost impossible to get access to those keys. So the signatories of the Federation basically did not have any access to the keys, right? But they could eventually collude to get access to all the HSMs and have access to the funds, right?

Because that version of the HSM was not that intelligent in terms of it will secure the private keys, but it would sign the transactions anyway. I mean, with no additional logic. And finally, we got to the evolution of that model, which is the POPPEC, right? That basically this federation is replaced by a set of what we call a pegnaturis, right? Each of them also running an HSM, but this HSM follows the blockchain proof of work consensus, right? So even if they collude and get access to all the Hsms, they will not be able to sign any pegout transaction if it doesn't have enough proof of work and if it doesn't come from the bridge. So basically it's impossible for them to collude and get access to the funds with this new model.

So it's, I don't know if that's, it's now clear, but basically in summary, like describes the evolution we had from the hybrid SPB two-way peg until this version that we call POPEG, where there is no, no way these signatories can get access to the funds. So basically the role of these spectators is mainly to keep their hardware and their nodes connected and alive at all times. That's their important role here, right, so they can access so that the pegout transactions can be signed. Neither the hybrid SPB version or the HSM version 1, now the PauPEG, the signatories play a role in transactions. section validation or creating blogs or anything like the role of these members is basically to they participate in the peg out uh workflow right like people wanted to get bitcoins out that there are bitcoins on on a risky okay no that makes a lot of sense so just kind of to sign up here like in a federated peg we have participants that are holding uh different parts of a of a key of a multi-sig key and

they essentially hold a Bitcoin that then gets, you know, transformed into Bitcoin RNSK. Like they're operating the peg. The issue here is that they can collude. And there's no sort of like layer in between the user and that multi-sig. There's no extra security layer. And it would just necessitate some sort of collusion for those bitcoins to be extracted from the system. However, the POWPEG, you know, and also like, you know, in the first version, keys could be stored in an HSM and they probably were at some point or, you know, like the security of the key is sort of separate from the risk of collusion. In this powpeg mechanism, the pegnatories, as they're called, have this sort of special HSM and the special HSM protects users from this form of collusion because,

the HSM not only stores the keys, but it also validates, it also validates transactions that are coming from the network. So it verifies that a transaction has been included in a block, presumably, like, verifies that it's been, that that that block has, that there's been like a certain number of blocks since then. And also it verifies some other things, like it verifies that those transactions are actually coming from the bridge itself. And so that adds an extra layer of security for users of the system because they can trust that these HSMs are in fact executing transactions as they should be. Yeah, no, just one comment.

Yeah, it's pretty accurate what you say. And when we consider the POPEC as a proof-of-work base, two-way peg, it's basically a peg-out command that is requested to the HSMs. it will wait not only for certain amount of blocks, but also for a certain amount of work accumulated, right? So that's very, very important. So I wanted to add up. Well, I mean, there's like a few things here, I guess. Like, in terms of trust, these HSMs, I mean, like,

they're not your standard HSM, like, that you would find, say, like in an AWS stack or something like that. They're, like, specifically manufactured for, for the RSK chain, correct? No, actually no. When we started working on AT-SMs, our security team did a broad research about the different possibilities of devices,

even consider the possibility of manufacturing these ourselves. We consider like all the different hardware wallets available in the market. And basically we, although it's, we have plans to like be more, I mean, to have other devices so that it's like a more multicultural two-way peg in terms of the devices that it runs. The HSMs that are run are not like manufactured by ourselves. It's like they are, the version that is currently running is a ledger device, right, with a special firmware that we, we, we, develop, right? And I think that's important because Leisure has, I mean, their product is great. It has a secure element. It's very secure in terms of protecting the keys. And at the same time, I think it's good in terms of security that this is not manufactured by ourselves in terms of minimizing the

incentives of a manufacturer supply attack or something like that. I mean, later already is storing billions of dollars in cryptocurrencies. I would think that it's not something that would be in the manufacturer mind of doing some kind of supply chain attack. Of course, we always consider any possibilities. but the fact that these are like devices well known and proved and that's already protecting a massive amount of money in cryptocurrencies, I think that's a good point and trend for this model of Hsms. Okay. No, that's interesting.

I didn't know that it was a ledger device. So in my mind, I was thinking like this is like a rack, like a rack device in like some server room. No, no, no, it's pretty easy. And yeah, I mean, these pegnatories basically, as I said, had the responsibility of running the Popet node, which is an RSC node with additional capabilities to basically be able to participate in this workflow. They basically are running a ledger device that has all this logic

inside of it, right? You basically acquire some ledger devices and then you've flashed those devices with your own firmware, like firmware that's been... How does that work? I didn't think that one could just flash a ledger device without having ledger's signature.

Well, yeah, actually, it's not that it's flashed and that's a good point that you mentioned because... Maybe flashing is not the right term here, but like, yeah, basically... basically overriding the firmware. Yeah, yeah. It basically works that way. So there is a setup for the pegnatories to, and secure setup.

And we are very close to also releasing the attestation firmware so that anyone will be able in the community in RISK, anyone willing to validate that the signatures of the pegnatories are coming from a device, from an HSM, from an original lecture device, and that it's running a well-known firmware, which is like a software code like any other program, can validate and verify that. That's very important for us to give transparency on this. But going back to your question, yeah, basically the peignatories can get a ledger. And I think that's also good. It's not something that we are, as I said, manufacturing and providing to them,

and they don't know what's inside. They can validate that. And yeah, there is basically a process, a secure process or ceremony, as we usually say, where this firmware is updated. Basically, the signer is updated with all this logic I mentioned before. I'm trying to like see where I can break this apart if I can at all. But couldn't all of the pegnatories collude to write their own firmware and then all of them together having the same firmware,

essentially like bypassing this security of like validating that there's been enough proof of work? and like, you know, couldn't they just store the keys kind of on the HSM and then, or somehow bypass that security? Or is there something in the bridge contract that's that were there's also like some dependency there for the verification? Yeah, yeah. Short answer is no, they cannot do that. They cannot do that.

I mean, they could eventually change the firmware, but that will make them basically not be able to participate in the protocol. So, right? And that's because there's some external, like the bridge contract or some other component is verifying the framework or the framework? Yeah, it's verifying the signatures. If they change that, everything will change and they will not be able to participate. So basically they will be automatically out of the system, right? Okay.

Yeah. I guess the hardware was one of the things that, you know, going into this, I was where I was most concerned with. but it seems that you guys are relying on third-party hardware manufacturers, and perhaps at some point, like, I don't know if this is the case, but you could imagine having Treasurer or like some other HSM manufacturer also being supported, and so then it's sick. You know, you basically have this, you know, you can use any commoditized hardware to do this as long as you're running a compatible version of the firmware.

Absolutely there are ways to improve that. it would be good, I think, to have other devices. And we have plans for that. And I would say if you want to like be, and I think it's important that we improve the security as much as we can. And we have like a roadmap for this to continually improve this PO PEG system. But we have even thought about having the like the peg natures or proposing the communities, of course. to run two devices, right?

So it would give like a backup mechanism in case anything fails. But I would say that currently this two-way peg system is the most secure that has ever existed earlier. We are very proud of it. So the only real like risk that one faces here, I guess, is like a denial service attack or situation or like all the pagnatories being down or like that's

and then and then the risk there is that the bridge wouldn't work but you know this wouldn't affect people's Bitcoin like basically it would just it would just render the bridge unable to to function but it wouldn't affect people's funds well actually

what that's that's an interesting point basically what would happen if the majority of the pegnatory is turned there like notes of right that's what you're saying what basically happens there is that users will not be able to so that the pegout commands will not be executed you will not be able to get bitcoins from your bitcoins on RSC right so everything in RSC will continue working exactly the same you will be

also be able to do pegins, so you to get Bitcoins in RSCA using your Bitcoins, but there will not be enough pegnatories to issue or to sign the payout transactions and get your your your your bitcoins back. That's what it will not work. That's not something, although a lot of other things will continue working. It's a critical component of the of the workflow. They're like things we are of course all the time our research team is thinking about that the the first solution or the short-term solution for that it's basically what we call the time lock emergency recovery right it's similar to what liquid has in short if bitcoins and and this is coming this is coming the next network upgrade for for r sk which is iris and

and expected to be released probably, most probably during April. And basically what that means is that the funds are not moved for a certain amount of time. Let's say one year. It's how it's working in Iris. Then those funds will be available for a set of, of a fallback pegnatories to move, right? So in that case, they would recover the funds and basically get them back to the users.

But it's true that that would happen only after one year of the funds not being used. It's like an emergency procedure that can like a kind of escape hatch for that situation, but it takes time for those funds to be available, right? So that's like an edge case that it needs to be considered. So it's a good point you were mentioning here. Oh, this is interesting. I feel like I get the power peg mechanism a lot better now.

And so what are Armadillo's? What do they have to do? Well, yeah, Armadillo is, how do they attract here? Yeah, yeah, it's an interesting technology we've developed lately. It's basically a suit of tools that are designed to protect the Rioscape blockchain from merge mining attacks, basically. It's like an alert system. or monitor system

and basically its role is to ensure that the merge mining works as expected like to say so basically what are the attacks that can occur in merge mining that we're talking about here yeah well basically it's the attack in this case would be an RSK fork

right so so a significant amount of hashing power doing merge mining basically building a narrow scape fork and then reberting the blockchain and doing probably double spend attack or something like that. I mean other blockchains have suffered from this, especially Ethereum Classic lately, because also their has been hacking power was quite low. And in the case of Irish case, as I said, it's high, around 60% of UMM. more of the hacking power, but we need to consider the possibility of the attack coming from the same miners that are doing merge mining, right? So what basically, in an actual,

what Armadillo does is, like, it's able to monitor this by inspecting the Bitcoin merge mining tags, right? So basically, it's looking into the Bitcoin merge mining tax to see if the blocks that should be mining RSC from the ones that have been mining Bitcoin are being like actually mined, are being sent and that they are not being like kept by a single miner or a set of miners. And if that happened, it can trigger alerts or even maybe stole certain operations to avoid a double spend attack. That's in an actual what Armadillo does. It's based on the assumption that this attack comes from miners that do not want to lose

the possibility of mining bitcoins, right? Because the attack would be like really, really expensive if they don't do that, right? So that's basically it. But yeah, it's more than Armadillo notes. It's like, as I said, a suit of tools or a monitoring system to protect from that kind of attacks. So Armadillo monitor is not like, they're not nodes, so to speak. But when you say it's a set of tools, like what forms it take? Is it something that you guys are running?

Yeah, yeah. Actually, it's a, well, probably you can say nodes. Yeah, it's like this technology that we are now running from Iob. It's not like it's running an armadillo. No, it's not part of the economic incentives of the platform. It's not that you, at least for now it's not that you, by running an armadillo monitor, you get rewarded or things like that, which I think it's where you were probably trying to understand. down. It's not part of the incentives of the network.

What happens then when a fork is detected and what kind of mechanisms are in place to mitigate that event? In that scenario, I would say that there are two main things that you need to protect. One of one of one is the two-way peg, basically delay the pegout transactions until the situation is safer to resume operations, right? So it doesn't mean that basically the two-way peg will keep the request but wait for for for the emergency to be finished in order to continue processing the peg outs, right? And the other aspect that you need to protect is basically exchanges right because it's probably an

attack that can make someone like get out or exchange their bitcoins on our escape for Bitcoins so that when they revert the blockchain, they get their bitcoins on RSC back, like a traditional like double spend attack, right? So it's important that exchanges get notified about this situation, that they probably hold the trading for a certain amount of time in protection. I mean, it's like what we do is like basically, the alarms, right? This is happening. And of course, it's, it's up to them to decide what you do. But basically, that's why I say it's a monitoring system. We are like basically raising an alarm

and say, this is a situation where you may want to basically delay or add more confirmations to withdrawals of Bitcoins on RSC. And so does this sort of thing happen often? Or is this an attack that is? No. No, it hasn't happened. It hasn't happened. I'm not like super familiar with like merge mining and the types of attacks that can happen there. And so I feel like this is an area that where it's a little bit blurry for me about like.

Yeah, no, no. How often these kind of works can happen. No, no. It's not common. It hasn't happened in our scale, but we've seen that happen in other blockchain. So basically we want to be prepared for those possibilities. is I if you ask me, I probably is not like something very usual, but if that happens, it can be a big headache. So we want to be protected and protect the, that the protocol protect the user funds, right?

Regarding merge mining, like, like maybe this will help you understand that when you do merge mine in the Bitcoin blocks contain a merge mine tag that basically includes a hash. There is a hash of a block in RSK. I mean, there is a link in the Bitcoin block itself with a link to RSK. So basically, that way, by monitoring that you can detect if a miner is basically contributing with blocks to the Bitcoin blockchain, but not contributing to RSK. like it's mining r sk blocks but it's like keeping that them for for themselves so that probably doesn't look good it's probably a sign of a possible like uh reversion of the blockchain

if it suddenly sends a lot of blocks and the blockchain gets reverted so that's i don't know if that clarifies a bit yeah that makes uh yeah it's armadiv is basically based on monitoring the bitcoin blockchain and the merge mining tags for r sk so let's talk talk a little bit about the EVM here and what kind of interoperability does that provide RISK with Ethereum and you know I know this doesn't exist now but you know could there be a sort of a peg on the other side where you could have like wrapped ether on RSK or like in the other direction having RSK tokens or sort of like a wrapped Bitcoin version of our like an RSK version of wrapped Bitcoin getting sent into into

Ethereum. Okay. Yeah. So regarding the VM, RSK VM is fully compatible with the EBM. Actually, the RSK client comes from a fork from an Ethereum client. Of course, that was long ago. and we've diverted from that, but basically the VM, the RSK VM is a fork of the Ethereum VM. So one of the things that we, of course, have to work on is on keeping that compatibility.

I mean, if there is new upcodes or native or pre-compile contracts in Ethereum, we take care of implementing them in Narvestk so that we keep that compatibility. But that makes the VM fully compatible in terms of the operations that the VM can run. And of course we have also taken care of being compatible at the interface level. I mean, the way you can interact with an Ethereum node, it's the same way you can interact with an RSC node. So that's basically led developers to use the same tool chain, the same developer tools. and so moving or running your application or your DAPS in Ethereum in Rootstock in RISK is pretty straightforward, right? So any solidity contract can run on RSK.

So MetaMask, you know, like Truffle, all these tools are compatible. Yeah, hard hat. As long as we take care of implementing the things, that Ethereum is implementing, and that's something that we do all the time, we keep that compatibility at the VM level and at the interface level also. So it's easy. It's really easy for developers and companies working on Ethereum to run their solutions on RSCA seamlessly. Speaking of developers, what are people, let's talk a little bit about sort of the ecosystem and what are people building on RSC?

And like, how big is that ecosystem today? The ecosystem is evolving a lot lately. There are like very interesting projects that are being built on RSC. All of them with the mindset of building on Bitcoin, right? Because that's probably the most important value proposition for RSK is that it's built. on Bitcoin and building this defy ecosystem on Bitcoin.

So we have a lot of interesting projects to name a few. We have money on chain. It's a Bitcoin collateralized stable coin. They have different tokens, but basically based on having a leverage on on Bitcoins and getting some additional revenue for your Bitcoin. but the main product they have is the dollar on chain, which as I said, it's a USD stable coin backed by Bitcoin. So it's really, really interesting and a great team behind that. Sovereign, it's a very interesting project.

It's a lending and margin trading platform running on RSC, also Bitcoiners, wanted to build these solutions on top of Bitcoin. There are other lending solutions coming soon. There are decentralized exchanges like RSC swap, similar to Uniswap, where you can trade tokens on RSK. There is a marketplace, people from crypto market. I don't want to forget anyone, collectibles with Watafan and wallets, like defiant, a lot of wallets implemented in NARBECA.

I mean, we're very happy because we've seen this growing a lot lately around this idea of building on Bitcoin and building defy solutions for Bitcoin. What is what we want to achieve right from, in this case, from IOP labs, like providing these technologies for these amazing companies to build their, They are companies, their businesses on top of RASK and on top of Bitcoin. No, that's cool.

I mean, like, it's cool that there are sort of the basic building blocks, it seems, like, building blocks to growing a DFI ecosystem on top of RSCs. So you mentioned, like, lending, like a swapping mechanism, a stable coin. And these are all the types, like, these are basically the building blocks that, you know, have been built on Ethereum. the last couple of years and from there, like all of the ecosystem kind of built there, you know, I'd like to maybe take a step back a little bit and ask you about, does Bitcoin in your view in the future play a significant role in securing, you know, some defy ecosystem? I don't know what the market cap of like the RSK, the RSK defy market is today.

I think I saw somewhere was like around 300 million or. To be honest, I don't have that number in my head. Okay, I mean, I recall looking this up maybe like a month or two ago and it was like somewhere around that amount. So that pales in comparison to the defy ecosystem on Ethereum. You know, do you expect that to continue to grow to become something that is, you know, big enough to attract investors and projects and to essentially create like a, decent-sized ecosystem there. And what do you think is necessary for that to happen? Yeah, so most of the DFI, of course, movement has been built on top of Ethereum so far.

They have done a great job in building this community and this ecosystem and all the network effect that they have achieved. It's something that I find, yeah, I think they've done a great job. and I think it's fair to recognize that. And probably coming from the Bitcoin ecosystem, maybe, I guess that until recently, probably a significant part of the Bitcoin ecosystem have not been paying attention to this defy movement.

I mean, Ethereum has been alive for several years now, And I would say that the defy movement, it's like the most interesting things we've seen so far. It's been quite recently. And when that took off, it was not that easy to build that stuff on top of Bitcoin. Although there is like a huge community of bitcoins that are willing to basically to have access to these protocols with their Bitcoins. And that's, I think, going back to your question, I think that will definitely happen. Yeah, based on the vision we had initially of this needs to be built on Bitcoin because it's the most secure and it's the most stable platform and decentralized platform.

So it makes sense for us to build this on Bitcoin. Right. And now the tools are available. It's, I think, yeah, we will see, apart from all these projects I mentioned before, we will start seeing a lot of of other ones building on top of Bitcoin, hopefully on RSK, but hopefully we will see other Bitcoin side chains building on top of Bitcoin. And I think that's something that it's good and it's something that will definitely. definitely happen. And the evolution of Bitcoin will happen in technologies like KrosK. You know, that Bitcoin is intentionally, the development of Bitcoin is intentionally careful and it's intentionally slow. So it's good to have. And that's great. I mean, it's strength of Bitcoin.

and as long as the layers about Bitcoin like Carrescate give enough security and give enough transparency and are decentralized enough, I'm sure this will definitely happen on Bitcoin and we will see like a strong Dify ecosystem built on Bitcoin for sure. Yeah, I mean, like there's just so much capital there. and, you know, some of it has moved over into Ethereum, you know, through like some form of rap Bitcoin. There's a lot of capital, like, that's kind of locked there in Bitcoin and isn't being allocated in any meaningful way. You know, and I think it would be great to see all of that start funding things and actually

creating value. And I think, like, a lot of people who are, you know, you. who are early into Bitcoin and have Bitcoin and are long Bitcoin, you know, probably want to have opportunity. It probably would like more opportunities to be able to, you know, invest in, in projects. I mean, like, myself included. I mean, like, so as someone who, you know, holds Bitcoin, I've been reluctant to move that Bitcoin into Ethereum.

I mean, just because, like, this whole, like, wrap Bitcoin thing. It's not super comfortable with it. You know, like, I'm not extremely comfortable with, like, doing the rapid coin thing. Also, there's, like, high fees there. And so, yeah, it's not being allocated towards anything meaningful. It's just huddling. And, like, it would be great to have that sort of ability. Absolutely.

And these projects, as I mentioned, money and chain, so being, they have that vision in mind. I mean, these are protocols for bitcoinsers. use their bitcoins and yeah it's like uh and and incentives are better aligned in terms of having your bitcoins on r sk where the token the native token is bitcoin where the incentives uh to the miners are paid in bitcoin so uh but yeah but you still like a lot of things to do to see that like massively happening but we we're starting to see that happening and and yes i said before i'm I'm sure this will, we will see this like getting larger in the, in the upcoming couple of years. Absolutely.

Cool. So where can people go to find out more about RSK and like, you know, what is your call to our listeners? You know, what would you like our listeners to do in terms of engaging with RSK? Is it like building an RSK? Is it, you know, deploying their like Ethereum DAPs on RSK? like what's the goal like for for yeah so uh yeah i i mean for for developers as i said before uh it's really easy uh to build on r sk you will uh you will be able to use the same skills and same knowledge and the same tools you you use if you're all currently building on

Ethereum and and well, in in and at the same time with a transaction fees that are significantly much lower. And but I would say that it would be great for like other companies and other projects to to build on RSC and build on Bitcoin. And and yeah, of course we are from a. Iobelabs, of course, we are here to help. We have our developers portal in its developers.jsk.co. There is an open slack for anyone that wants to know more about the platform or ask any question.

It's open-r-k-def. Of course, all this is open source. You can get access to all the projects in RRRRF. projects in RSK and in other technologies like RSK infrastructure framework and everything is in GitHub.com slash RSC smart. There is an open forum to discuss community things, which is research.rpsk.deb. And well, that's the most important thing. I mean, we are like really looking to have more people develop on RSC technologies. We are helping them, their grants, and other opportunities to get incentives for doing this.

So, yeah, several ways to reach out, and we will be here to help. Great. Adrian, thanks for joining me today. It's great to connect with the RSK project. again and I'm looking forward to the day where, you know, there's a massively thriving ecosystem of apps and projects and, um, and lending protocols and like yield farming and all this kind of stuff happening on a hyper-Bitcoin. I think it would be like really beneficial for, for the ecosystem as a whole. And since there's so much capital there, it would, uh, give, you know, this possibility for,

for like an even larger ecosystem. And, you know, coming from Bitcoin, I think, like, there's some unique things about that community and, like, origins of Bitcoin that would, like, you know, shape, shape it in ways that are, like, different from the way things happen on Ethereum. Excellent. Yeah, absolutely. And thanks for having us. It's a pleasure to be here because it's a great learning podcast for everyone.

So thanks and congratulations. Thank you.