Blockchain payment network
Drivechains can make spending faster and easier when a blockchain is popular. If lots of people are using the network, there’s a fixed amount of space per block and lots of people competing for that space. So as demand for using the blockchain increases, transaction fees become more unpredictable and confirmation times get longer.
Drivechains Split Payment Traffic
Drivechains provide a way to separate transactions. Big settlement transactions, transfers of large savings or lifetime earnings from one owner to another, might want to happen on a base blockchain, where ownership of coins is defined, transactions are validated, and everyone maintains an independently verifiable view of a common transaction history (look at https://worldbank.org/en/topic/financialsector/brief/blockchain-dlt if you want numbers). (Part of this comes from limiting the network’s capacity on purpose: if everyone could do anything, anytime, it would be hard to come to agreement about a common transaction history.)
On the other hand, smaller-value payment transactions that happen more frequently, buying and selling goods and services, might be better on a blockchain that optimizes for low fees, fast transactions, and an easy user experience at checkout. Rather than forcing everything through the same bottleneck and reducing the network’s flexibility, users can opt-in to using another blockchain for payments that connects back to a settlement chain.
The Two-Way Link Between Chains
A drivechain is a blockchain that connects to another blockchain, via a two-way bridge for transferring coins back and forth between the chains; the Thunder drivechain explained is the page that matches this.
Drivechain rules vary by implementation, but they generally follow the same broad format:
- A user chooses to move some of their coins from one chain to another, via a deposit transaction. The original coins will become unavailable for spending, on the original (“parent”) chain.
- A different set of coins, on the connected (“drive”) chain, becomes spendable by that user, under the rules of that chain.
- Users on the connected chain can spend freely, within that chain. Eventually they might request some or all of their coins be made available on the parent chain, via a withdrawal request transaction.
- Miners on the parent chain include withdrawal transactions in their mined blocks, effectively voting on whether or not coins should be made spendable on the parent chain again. After some process of confirmation, the coins become spendable on the parent chain, and the corresponding coins on the connected chain become unavailable for spending.
Connected blockchain architecture
The specific transaction formats and confirmation process will vary from one connected chain to another, depending on its rules. A user moving some of their coins to a connected chain is agreeing to abide by different technical risks and security rules, while their coins are there.
Drivechains are different from most altcoins in that they derive their value from coins on the parent chain. The total supply of coins on a connected chain depends on how many coins users deposit to that chain (and take back out again). This is different from a blockchain that defines a new set of coins with a particular issuance rule, which must attract users who value its coins independently of other assets.
Drivechains can also be useful for trying new ideas: different chains can make different assumptions and choices around block frequency, transaction formats, block sizes and capacities, transaction validation features, etc. This can be helpful for merchants and users who are interested in particular improvements, which don’t make sense for (or won’t gain consensus to upgrade) on the parent chain. Rather than betting on an entirely new currency, they can try out spending in a currency backed 1-for-1 with coins they already hold.
A key piece of a drivechain protocol is the scheme by which coins are returned to the parent chain, when users request them. Rather than trusting a fixed committee of third parties to watch over deposited coins, or trusting a company to honestly return your coins on demand, drivechains generally seek a scheme by which miners are involved in validating withdrawal requests. How best to incentivize miners to participate, and resolve disputes about who owns coins, is an active area of discussion.
So in general a customer could pay a merchant using their drivechain balance, and the merchant could use their drivechain balance to refund a customer or pay their supplier etc., without requiring a transaction on the parent chain to effect those transactions. This is assuming that those everyday transactions could be done on the drivechain itself and settled on the drivechain itself. Withdrawing funds back to the parent chain is a process that requires a degree of patience.
Thus the merchant would have to decide how much to keep on the payment chain and how much to keep on the parent chain, balancing everyday usage (sales, refunds etc.) versus their desire to move the extra money back onto the parent chain and keep it there for the foreseeable. (And, again, how long it would take to transact between the two chains would be a major factor there. )
Wallets should show the parent chain balance and the drivechain balances separately, rather than show a grand total, to avoid misunderstandings.
What Makes Drivechains Practical?
In addition to improvements in drivechain security, it’s important to improve the user experience of transferring coins back and forth. People want to use wallets with reliable estimates of confirmation times and transaction fees, with easy options to exit back to the parent chain when desired. Merchants would like similar improvements, so that it’s easy to enable accepting payments on different chains, and experiment with different options to find what works best with their customers.
Testing With a Small Amount
If you’re curious about trying to deposit some coins to a drivechain, make sure to test-drive with an amount equal to 1% of how much you’d like to use. Make sure the wallet clearly indicates your coins have moved, that you can spend them as expected, and that the process for bringing them back is clearly indicated (and ideally tested, with those 1%). Different wallets may represent drivechain coins in different ways, so make sure you’re comfortable with how your coins can be spent, and brought back, before moving more coins.
