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The RSK platform was launched with a federation of well-known and respected community members (blockchain companies with high security standards) (the Federation). Each federation member, also referred to as a functionary or notary, is identified by a set of public keys, one used for Bitcoin multi-signatures, and others used for authentication and private communications. The conditions to become a Federation member have been established, including security policies, backup procedures, and legal requirements. In 2020, the Federation migrated to a new security model called PowPeg. Under this system, a functionary does not have access to their multisig private key, which is controlled by an HSM, while they do maintain control of other authentication private keys.
Currently the PowPeg Federation’s only role is to secure the two-way-peg. Each functionary has the responsibility to keep the HSM physically secured and connected to the RSK network. The federation does not participate in production of new blockchain blocks. In the future, the functionaries may provide additional services to the network. Some of the services that have shown to be valuable to the community are:
Two-way peg with Bitcoin
Two-way pegs with other cryptocurrencies
A requirement for being part of the PowPeg Federation is the ability to audit the proper behaviour of the software that powers the node, especially regarding the correctness of the component that decides on releasing BTC funds.
There have been proposals for alternative solutions to the sidechain two-way-peg problem, but currently no other satisfactory solution is available, either because it requires a Bitcoin soft or hard fork or because it requires the creation of a new token to use as security bonds. The RSK community is committed to decentralize the federation if a satisfactory solution is found, and the intention to do so is clearly stated in the RSK foundational whitepaper.
The PowPeg Federation has no means of “issuing more BTC”. Transferring BTC to the RSK platform is an open process. In the beginning of RSK, the RSK developers established a hard limit on the amount of Bitcoins that could be transferred to RSK, to reduce risks until the network reached maturity. Later, the limit was replaced by a cap that can be increased, but not decreased.
Bitcoin does not support smart contracts nor native opcodes to validate external SPV proofs. Part of the 2-Way Peg system in RSK requires trust on a set of notaries. In RSK, the notaries that protect the locked funds are the members of the PowPeg Federation. The PowPeg Federation members are respected community actors, such as important blockchain companies, and they also have the technical ability to maintain a secure network node. A requirement for being part of the PowPeg Federation is the ability to audit the proper behaviour of the software that powers the node, specially regarding the correctness of the component that decides on releasing BTC funds.
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