Sidechains cross-chain atomic swaps in payment channels

[JackH]

When looking at the operation of sidechains and the way that they are supposed to atomically swap, it makes perfect sense, in terms of two sidechains that both carry the code to allow for such.

This would however be executed on chain, rather than off chain, as in the lightning-esque fashion. Most atomic swap transactions would most likely be off-chain, in between multiple chains, while the on-chain atomic swaps would probably carry quite some significance to be done on-chain.

From the Lightning page it describes shortly that chains that support the same cryptographic hash function, would be allowed to swap in the secondary layer, the channel layer.

Can someone clarify exactly what an off-chain transaction exactly is in this instance? For example between Bitcoin and a sidechain (when SegWit is enabled on Bitcoin).

Would it not mean that a sidechain's payments channel that is swapping for a Bitcoin's bitcoin on a payment channel, or mixing them together to form a third layer of abstraction combination wise, indirectly give value to the token itself on the sidechain, in its secondary layer. I am specifically thinking about a sidechain that is assets based in this case.

Its been bothering me for a while that the lack of PoW on sidechains makes them no more interesting from a security point of view than any other environment. Would a secondary or third layer, after mixing the tokens together, form a more substantial protection for the sidechain asset chain?

[1714191025]

1714191025

[1714191025]

1714191025

[1714191025]

1714191025

[CIYAM]

My understanding in regards to LN is that those "off-chain" txs are still standard (and will presumably be SegWit ready) Bitcoin transactions that will be using both the nLocktime and nSequence mechanisms.

The nLocktime mechanism is what "opens" the channel and determines how long the channel will be opened for.

The use of nSequence will be particularly useful for streaming kinds of service - you might pay say 0.001 BTC for 1 second of streaming and assuming you keep on paying (with the same UTXOs but a new nSequence) then you continue to stream up until the point that you stop paying (at which point the vendor just needs to broadcast the final tx and it won't matter if you've tried to broadcast one or more earlier txs as the nSequence will mean that the last tx replaces those).

The key thing in this case is that there might be literally tens of thousands of txs created and broadcast that will never appear in the main network (only one or perhaps more txs if someone is trying to cheat). This is how massive scaling might be achieved without having ridiculously large blocks (I say "might" as we are yet to see how this pans out and whether or not streaming services will be using it).

I'm not really sure how these mechanisms can help with the asset idea though (perhaps others might be able offer some insight).

[danda]

I keep hearing the streaming service used as an example, but is there any evidence that people actually wish to pay for content that way?

It seems to me that many/most people prefer paying once a month (auto-renew) or once a year for a streaming service and after that it's all you can eat.   Psychologically if I have to pay some precious BTC to watch a movie or TV show, even if I know it is only millibits, I'll normally pass.  This is true also for Amazon Prime, where I watch all the prime content, but have never once paid for the a-la-carte content. 

Setting up the recurring once-a-month plan is typically a one-time event.  There is a mental cost to making spending decisions, so people tend to prefer fewer of them, even ironically if money could be saved the other way.

I think the same psychology applies to the other common example of monetizing web pages ( articles, etc ).   People are used to stuff being "free" and there is enough content available and attention spans so short that I question the number of willing buyers. 

Browser / advert integration such as Brave is interesting... they could use Lightning micropayments to the end-users for viewing adverts. 

Where I could also see it working is for playing video games.  Though even in that industry services like Steam are now offering all-you-can-eat, as I understand it.

It will be interesting to see how it all plays out, but I certainly wouldn't stick all my eggs in the micropayments for content basket.