Echo Launches Bitcoin Sidechain, a Weighted Approach to More Functionality

Echo Launches Bitcoin Sidechain, a Weighted Approach to More Functionality 1

In late November 2019, the Bitcoin-based DApp network Echo announced the launch of a Bitcoin sidechain on its blockchain testnet. It framed the release as a critical step in its mission to establish decentralized financial applications that leverage BTC as a native asset for lending, trading and more. 

“The launch of the Bitcoin sidechain on Echo testnet is the first step towards building the most trust-minimized sidechain for Bitcoin in existence,” Alexei Dulub, founder and CEO of PixelPlex, the blockchain development firm behind Echo, told Bitcoin Magazine. “Getting BTC into the network trustlessly is the hardest technical problem to solve to reach that vision, but this first release is a giant step towards reaching that goal.”

While Dulub describes his team as advocates for Bitcoin Core, Echo sees a need to develop a sidechain that allows users to do more with their BTC.

“Projects like MakerDAO, Uniswap and Compound allow users to borrow against, trade and lend assets on Ethereum without a central party,” Dulub explained. “We want to bring similar functionality to the most trusted, secure and liquid cryptocurrency, BTC.”

PoWR and the Echo Sidechain Difference

Of course, there are other sidechain projects that promise to bring more functionality to Bitcoin while leveraging its security and trustlessness — most notably, Blockstream’s Liquid and IOV Labs’ RSK. These operate through a “federated” consensus model in which a small group of nodes serves as signatories for transactions, enabling these sidechains to utilize BTC as an underlying asset without having to achieve the full consensus required on the main blockchain. This means that users must trust this federation to act in good faith, a trade-off that has inspired a different approach from Echo.

“Echo’s design aims to minimize the trust required in the nodes that operate the connection [between Bitcoin’s main chain and the sidechain] by randomly selecting federation members based off of stake and frequently rotating the members,” said Dulub. “This greatly reduces this risk of collusion among or coercion of committee members to act maliciously.”

Echo calls this consensus mechanism “proof of weighted randomness” (PoWR).

“By randomly selecting validators for each block rather than forcing every node to validate every block, [PoWR] minimizes the resource requirements of running a node without compromising speed or security,” Dulub explained.

In practice, Echo sidechain users send BTC to a multisig address on the Bitcoin blockchain that is controlled by these randomly selected federation members. Once these members confirm that BTC has been sent to the address, they mint an equivalent amount of “eBTC” on the Echo chain. To convert their eBTC back to bitcoin, they can send it to a “burn address” (an unused, unaccessible address that effectively destroys the eBTC), which will then unlock the BTC back to the user on the main blockchain.

An Ongoing Challenge for Bitcoin

Dulub provided his outlook on the advantages of such a committee-operated sidechain, many of which are shared by other federated sidechains: The inherent centralization should increase the “liveliness” of the system and the sidechain remains safe from mainchain miners who might want to disable it, among others.

But ultimately, Echo’s sidechain is just the start in what will be an ongoing challenge to add more functionality and flexibility to Bitcoin while maintaining the inherent safety and decentralization of its main blockchain. It’s a challenge that Echo is not alone in undertaking, but one that it may have a truly unique and powerful approach to.

“Our main goal is to allow Bitcoin users to do more with their BTC, without ever jeopardizing the integrity of the main Bitcoin blockchain,” Dulub concluded. “Perfecting the sidechain will continue to be a work in progress, but we have made great strides and couldn’t be more excited to be pushing the limits of this new technology.”

Those interested in participating and getting their hands on this technology should visit Echo’s tutorial page.

Disclaimer: The parent company of Bitcoin Magazine, BTC Media, LLC, is an affiliate of Echo.

About the author

E-Crypto News was developed to assist all cryptocurrency investors in developing profitable cryptocurrency portfolios through the provision of timely and much-needed information. Investments in cryptocurrency require a level of detail, sensitivity, and accuracy that isn’t required in any other market and as such, we’ve developed our databases to help fill in information gaps.

Related Posts

E-Crypto News Executive Interviews

Crypto Scams

Beanstalk Farms Loses $80M In A Massive DeFi Governance Flash-Loan Hack
Beanstalk Farms Loses $80M In A Massive DeFi Governance Flash-Loan Hack
April 23, 2022
Joon Pak Head of Crypto at Prove talks to Us about Crypto Fraud And More
April 11, 2022
Mintable CEO Zach Burks Talks to Us about the Opensea Stolen NFTs and Their Recovery
March 21, 2022
Crypto Crime
Crypto Crime Surges To Record Highs As Thieves Follow Market Buzz – Chainalysis 2022 Report
February 24, 2022
Bots Circumvent 2FA Login At Coinbase And Other Crypto Exchanges In 2022
Bots Have Circumvented 2FA Logins At Coinbase And Other Crypto Exchanges In 2022
February 17, 2022

Automated trading with HaasBot Crypto Trading Bots

Blockchain/Cryptocurrency Questions and Answers

Roundtable Interview-What is the Effect of The Russia-Ukraine War on Cryptocurrency Prices?
March 4, 2022
How Does Bitcoin Casino Work + 2021 Beginner’s Guide
November 8, 2021
How to Buy and Sell Cryptocurrency
November 8, 2021
What Are Bitcoin Futures And How Will They Work In 2022?
November 4, 2021
The Unconventional Guide to Ethereum
October 28, 2021

CryptoCurrencyUSDChange 1hChange 24hChange 7d
Bitcoin28,779 0.84 % 2.86 % 5.28 %
Ethereum1,742.0 0.57 % 9.35 % 13.92 %
Tether1.004 0.36 % 0.53 % 0.30 %
USD Coin0.9989 0.16 % 0.08 % 0.04 %
BNB294.05 1.48 % 7.40 % 4.41 %
XRP0.3939 0.83 % 2.20 % 6.58 %
Binance USD1.004 0.14 % 0.53 % 0.04 %
Cardano0.9566 0.22 % 0.68 % 6.96 %
Solana40.61 1.23 % 12.37 % 22.39 %
Dogecoin0.07691 0.95 % 5.62 % 11.67 %

Bitcoin (BTC) $ 28,927.00
Ethereum (ETH) $ 1,745.80
Tether (USDT) $ 1.00
USD Coin (USDC) $ 1.00
BNB (BNB) $ 297.22
XRP (XRP) $ 0.395898
Binance USD (BUSD) $ 1.00
Cardano (ADA) $ 0.456862
Solana (SOL) $ 40.39
Dogecoin (DOGE) $ 0.077318