RootstockLabs is pleased to announce the launch of Powpeg, a significant upgrade to the existing peg technology on the Rootstock blockchain, the first Bitcoin layer 2.
Powpeg is a proof-of-work secured two-way peg used to interact between the Rootstock side chain and the Bitcoin blockchain. Powpeg is the first Bitcoin peg to provide security assurances based on Bitcoin’s proof-of-work, making it the most secure and permissionless peg available today.
The Rootstock native currency, RBTC, is tethered one-to-one with BTC. The only way to create RBTC is by sending or “pegging-in” BTC to a multi-sig address in the Bitcoin blockchain. This address locks the BTC, and proof of that transfer, or SPV proof, is generated and sent to a bridge smart contract. Once the bridge contract gets this proof, it sends the equivalent amount of RBTC back to the user. “Pegging-out” is the same process in reverse.
Previously, this process was managed by a group of notaries controlling the multi-signature address with a majority needed to unlock funds. The Powpeg launch implements a new, decentralized approach to creating RBTC. It relies on a group of Pegnatories responsible for keeping their hardware and nodes connected and live at all times but who don’t play any role in transaction signing. They act as watchtowers to ensure that Bitcoin deposits are correctly informed to the Rootstock chain.
Pegnatories private keys are stored in special-purpose hardware security modules called PowHSMs. When an SPV proof is generated, it relays the transaction to the PowHSM to automate the signing process.
Powpeg is a vetocracy, where no single entity, or colluding group, can acquire enough power to control the peg or arbitrarily censor transactions. There are already twelve high-profile companies participating on Rootstock to provide support to Powpeg. These participants will be announced over the coming weeks.
This marks a significant milestone in completely decentralizing the Rootstock blockchain. The Rootstock community is developing additional technologies to further decentralize the peg, including the capability to permisionlessly introduce competing pegs. Rootstock is merge-mined with Bitcoin and has over 50% of the Bitcoin network’s hash rate. Therefore, these new innovations are aimed at providing Bitcoin miners with an active Pegnatory role in the Rootstock network.
The Rootstock sidechain is now home to a full suite of DeFi apps such as Money on Chain and Sovryn, where users can lend, borrow, and trade Bitcoin within the Bitcoin ecosystem. Therefore, this latest effort from Rootstock moves the Bitcoin DeFi ecosystem towards a more decentralized state, helping Bitcoin enthusiasts to achieve the goal of lending and trading BTC without having to navigate centralized services. It also opens new avenues for entrepreneurs and projects to participate in minting and pegging BTC and RBTC.
About Rootstock
Rootstock is the first, biggest, and longest lasting Bitcoin sidechain. It is the only Bitcoin layer 2 that combines the security of Bitcoin’s proof-of-work, with Ethereum’s smart contract capabilities.
Rootstock is open-source, EVM-compatible, and secured by over 60% of Bitcoin’s hashing power, which makes it a gateway to a vibrant ecosystem of dApps that continues to evolve to become fully trustless.