⭐ Merited by BlackHatCoiner (4)
And just to be even more clear: It doesn't make sense to name it "layer 2", if it isn't reusing the token of layer 1. You either reuse the currency, or you're creating a brand new. In the latter case, there's very little reason to build it on top of another layer, and not recreate another layer 1.
Partly agree. In the current "Layer-2/sidechain" solutions Bitcoin is re-used* as currency, but there's another currency responsible for consensus. This does make sense somewhat because it's technically much easier to implement if you have flexibility to award the "federation" nodes with a new currency without a hard cap, and without depending on the current "bitcoin funding" of the sidechain.For example, if all sidechain rewards for incentives were based on the Bitcoins deposited via peg-ins, then we would run into an "hen and egg" problem: Who would secure a deposit if there are still not Bitcoins deposited to reward federation members/custodians? And who would deposit Bitcoins if there are no federation members incentived by a mechanism?
I understand thus somewhat why "Bitcoin maximalists" do not like sidechains, because an auxiliary currency seems necessary in nearly all models (with the exception of Drivechain).
I think the most elegant mechanism is to allow an auxiliary currency but distribute it via merged mining, so the same Bitcoin miners could also act as sidechain custodians. This could perhaps even be possible without the Drivechain model.
But PoS seems to be easier to implement. I see no problem if other sidechain problems/attack vectors could be solved first by the PoS sidechain projects. But I hesitate to really support these 50%-premined projects that exist now.
And I've to say that I would glady use a "Bitcoin on Litecoin" pegged token for example.
Completely other topic: I would like to throw CoinPool in the ring of the "batchin/utxo-reuse" solutions which allow to "re-use an UTXO" in a group of participants, not only by two members like in Poon-Drya payment channels ("Lightning"). There's a thread started just by @BlackHatCoiner
two years ago but it didn't see much traction. I have seen the concept only very recently and have to investigate if it's an improvement over the "channel factory" concept.* not in all though, one of the L2's I investigated recently called BVM was based on wBTC. While wBTC can be backed somewhat decentrally via tBTC most wBTCs in circulation come from centralized bridges, so I would not call this really a "Layer 2" for Bitcoin.