Good to see the old post has a reply

I still want to work on this, just keep getting distracted with other tasks, but I am slowly dipping my hands deeper into the code, so maybe this year I can make some more progress on this.

I don't see any major problems with fungibility as what level of chain you use depends on how much fees you are willing to pay, and this also is directly dependedent on how big in value the transaction is. So if I want to sell you a bitcoin, you just tell me what chain "path" you are on, and I send it to whatever level on that path you want. The higher level, the more fees, just like with a bank or with postal mail, you pay more fees for more security for the transfer.

Sorry for the diagram, I will try to get the link back up. And also, it is annoying that Peter R used the same term "subchains" as me.