All You Need to Know About Rootstock

Bitcoin is one of the most secure blockchain projects in the world. However, its scalability issues are a concern for many. This is due to its slow processing time and the volume of transactions it has to finalize.

To help mitigate this, the revolutionary sidechain project Rootstock has emerged to take some of the weight off Bitcoin’s shoulders. This article will explain what Rootstock is and how it works.

What is Rootstock?

RSK Labs founded Rootstock as a multi-purpose smart contract platform designed to address some of Bitcoin’s limitations, particularly functionality and scalability. It is hosted on Bitcoin as a sidechain, so it can harness its security and other benefits to deploy and operate smart contracts seamlessly.

Developers can use Rootstock to migrate their smart contracts from Ethereum, making their Ethereum dApps compatible with Bitcoin. Rootstock can perform transactions up to 10 times faster and 50 times cheaper than Ethereum. Thus, we can consider Rootstock as a solution that extends Ethereum’s capabilities to Bitcoin.

History of Rootstock

Rootstock was founded in 2015 by RSK Labs. Its co-founders are Sergio Lerner and Diego Gutierrez Zaldivar, both from Argentina, with a shared passion for finding alternative solutions to traditional systems. The project also taps into the intellect of Nick Szabo, a renowned cryptographer and the pioneer of smart contracts. It launched its mainnet in 2018.

How Does Rootstock Work?

Rootstock uses a 2-way pegging solution called Powpeg to connect with Bitcoin. This mechanism facilitates the transfer of BTC from the Bitcoin blockchain to a secondary blockchain and vice versa. As such, users can send Bitcoin directly to the Rootstock sidechain, which will be converted into RBTC tokens. This is not an actual “transfer,” however. What happens is that the tokens are temporarily locked on the Bitcoin blockchain while an equivalent amount of tokens are unlocked on the secondary blockchain.

Rootstock also enjoys interoperability with Ethereum, providing a complete virtual machine compatible with the Ethereum Virtual Machine. This virtual machine allows Rootstock to use important EVM features, such as smart contract development and digital asset management, on the Bitcoin blockchain. This gives Bitcoin the benefits of an Ethereum network. Additionally, because of the compatibility with EVM, developers can easily use Ethereum tools and languages like Solidity to create decentralized applications (dApps) on Rootstock.

Compared to Bitcoin, Rootstock is much faster and more scalable. In perspective, Bitcoin’s blockchain takes up to 10 minutes to verify a transaction because of processing power and the time required to open a new block. When a smart contract is added to a block, it significantly reduces the block’s capacity to hold transaction metadata, which slows down the network even more.

Furthermore, Rootstock’s sidechain technology is crucial in enhancing Bitcoin’s scalability by performing additional tasks on its secondary blockchain before committing them to the primary blockchain. With a faster confirmation time of only 28 seconds, Rootstock can significantly reduce transaction delays, allowing Bitcoin to focus on mining and validating transactions more efficiently.

Key Features of Rootstock

Rootstock is an innovative sidechain dedicated to easing the pressure on Bitcoin to scale dApps efficiently. It uses several features to make this happen, including:

Merged Mining

Rootstock naturally uses the exact consensus mechanism as Bitcoin (Proof-of-Work), but it enables miners to generate blocks faster than Bitcoin’s base layer. Since both blockchains use the same consensus, Rootstock offers its miners the ability to engage in what is known as merged mining, a solution where a miner solves cryptographic puzzles for two blockchains simultaneously.

Merged mining is a process that involves creating blocks for two different blockchains simultaneously. If the miner successfully solves a block on one blockchain, the solution will be immediately applied to the other blockchain. This protects the blockchains from consuming twice the same amount of computational power from miners.

Using merged mining allows Rootstock to leverage Bitcoin’s robust hashing system, one of the most secure in the cryptocurrency industry. This is an efficient approach, as miners no longer have to split their hashing power or buy more hardware to handle mining from two blockchains simultaneously. Also, miners receive transaction fees as rewards from both Bitcoin and Rootstock. This approach incentivizes miners to join Rootstock, further boosting its security.

Powpeg

This is the bridge Rootstock uses for its two-way peg service, and it runs on Rootstock’s primary asset, smartBTC. This is because Rootstock does not have its native gas token. As such, Rootstock uses smartBTC (RBTC) tokens that share the same value as regular BTC and are used to pay transaction fees on Rootstock.

Transferring assets between Rootstock and Bitcoin runs on two main mechanisms: a vault and a smart contract. The process of transferring Bitcoin to Rootstock is referred to as “pegging in.” To do this, users must lock a specific amount of BTC into a vault on the Bitcoin network. This, in turn, unlocks an equivalent amount of smartBTC (or RBTC) tokens on Rootstock.

On the other hand, transferring smartBTC back to Bitcoin from Rootstock is known as “pegging out,” and users must send an amount of RBTC to a smart contract on Rootstock. This will, in turn, unlock the same amount of BTC from the vault hosted on Bitcoin.

RSK Virtual Machine (RVM)

As a testament to its interoperability with other projects, the Rootstock Virtual Machine (RVM) shares backward compatibility with the EVM, enabling effortless execution of Ethereum smart contracts on Rootstock. Using the same code and tools for Ethereum-based dApps, developers can easily create smart contracts on Rootstock with the RVM, making it a less expensive option than building dApps. The platform supports programming languages like Solidity and will enable developers to send their Rootstock-based assets to Metamask, a popular Ethereum wallet.

Federated Sidechain Model

Rootstock adopts a hybrid sidechain model, which comprises semi-trusted third parties (STTPs) called the Federation. The Federation is responsible for securing locked funds during cross-chain transfers, and they are crucial in maintaining the integrity of Rootstock’s two-way peg procedure.

Nonetheless, Rootstock plans to switch to a drivechain model, where locked bitcoins will be kept with merge miners instead of the Federation. This reduces the need for trust, further simplifying the two-way pegging process.

Rootstock Ecosystem

Rootstock offers a growing list of dApps built on Rootstock for users to interact with. They include decentralized exchanges (DEXs), micropayment channels, retail payment systems, and escrow services. Some of the more famous examples include:

Oku Trade

Oku Trade is a front-end trading platform initially funded by the Uniswap v3 protocol. The platform aims to revolutionize the trading experience in the DeFi ecosystem by providing traders with a professional interface full of features to ease decentralized trading. The project is now available on various platforms that support all existing and new liquidity pools. Traders can take advantage of features such as limit orders, order books, price charts, and user order history to improve the quality of their trades.

Let’sBit

Let’sBit is a one-stop platform for digital financial services in Latin America, aiming to bridge the gap between traditional finance and cryptocurrency opportunities. It offers a virtual wallet that helps users manage their daily finances by allowing them to buy dollars and cryptocurrencies, pay for services, and generate profits from active usage. Users can easily download the app, request a card by filling out their information, and enjoy the convenience of having all their finances in one place.

Fireblocks

Fireblocks is a digital asset custody platform that provides secure management solutions for businesses dealing with digital assets. The platform’s primary product, Fireblocks Off Exchange, helps trading firms eliminate counterparty risk while trading on centralized exchanges. The Off Exchange feature also allows traders to allocate assets to an exchange from an on-chain wallet directly, protecting against hackers and fraudsters.

Conclusion

Rootstock has developed an innovative approach that shows promise in solving the scalability and security challenges hindering the widespread adoption of the Bitcoin blockchain. Rootstock offers an easier path for developers and users by using the Bitcoin network’s security while enabling increased transaction throughput on its sidechain.

However, it is essential to remember that Rootstock is still an evolving technology, and continuous development and collaboration are necessary for its long-term success. As the technology matures and gains wider adoption, it is crucial to stay informed about its progress and potential risks before engaging with any applications or protocols built on the Rootstock network.