What is Rootstock’s RIF and why should you care?

There is a lot of confusion about the introduction of Rootstock’s second layer, called RIF, and how it all ties together. Time to clear that up and show why this is a very big deal for Bitcoin. Consider this your go-to guide for all the main fundamentals of Bitcoin’s sidechain and its recently launched second layer.

Image 1: The RSK logo

This article is for those who want the abridged version of the Rootstock project in relation to the introduction of their second layer in an easy-to-read and accessible format. Before we submerge into our deep dive let’s take a moment to structure it. If you want specific info then you can scroll down to that specific part and save yourself some valuable time. If you are new to the project then we recommend reading it all, the main goal is to serve as a beginner’s guide and will touch on documentation from both RSK and RIF. Let’s go!

By proceeding you are confirming that you have read and understood our Public Disclaimer.


Table of contents

1. What is RSK?
— What are the use cases of RSK?
2. What is RIFOS?
– The first RIFOS service
– Notable partnerships of RIF Labs
3. Clearing the confusion of the what, why and how of the RIF token
– Where does the confusion stem from?
– The utility of RBTC
– The utility of RIF
4. What are the tokenomics of RIF?
5. How does it all bridge together & why is Rootstock considered a gamechanger?
– RIFOS vs Counterparty
6. Looking into the future: how does RIF Labs aim to further tackle the Bitcoin scaling problem?
– Shrinking Chain Scaling
– Why is shrinking post facto important?
7. Summary


1. What is RSK?

RSK is short for Rootstock, the first smart contract platform secured by the Bitcoin network. It is known as a Turing-complete smart contract platform that is connected to Bitcoin via a two-way pegged Bitcoin sidechain.

What is Turing-complete you may ask? If a platform is Turing-complete then in its most simple explanation this means that the platform is theoretically able to solve any computation problem. It can run any program, given enough time and memory.

RSK is the first working and active sidechain on Bitcoin. All applications that can be run on Ethereum can be run on RSK by natively supporting solidity smart contracts, making it easier for developers to leverage their acquired knowledge base. Furthermore, RSK Labs aims to find scaling solutions for decentralized networks and has already shown its ability to scale far beyond the native Bitcoin Network. Currently, the RSK smart contract protocol has the potential to scale to 2.000 TPS. With with the addition of compression protocols, parallel processing, full node economic incentives and incorporating P2P protocols like RIF Payments (aka Lumino) it can achieve 20.000 TPS off-chain. The RSK side chain also reduces storage and/or bandwidth usage on the Bitcoin Network.

Summarized then RSK is:

1)A two-way pegged Bitcoin sidechain.

2) A Turing-complete deterministic virtual machine (for smart contracts)

3) A merge-mining consensus protocol and low-latency network.

Without going too much into the details it aims to make Bitcoin faster, cheaper, more secure and allow running smart contracts via Bitcoin. Concrete, this means transferring your BTC via the RBTC sidechain is A LOT cheaper.

What are the use cases for the RSK smart contracts?

In the RSK whitepaper the team summarized several of the use cases which can be built via the RSK Smart Contracts platform. RSK basically can do anything the Ethereum Smart Contracts allow, but then a more secure network. Several potential Smart Contracts include:

▪️ Retail Payment Systems (everyday transactions over the Bitcoin network, but way faster than native BTC and even Paypal);
▪️ Escrow Services;
▪️ P2p distributed exchange (DEX);
▪️ Creation of new crypto-assets (altcoins) secured by Bitcoin;
▪️ IP Protection / Registry (proofing existence of certain documents or property rights);
▪️ Micro-lending (access to credit to the unbanked — which is one of the primary conditions for economic growth);
▪️ Supply Chain Traceability (Track and trace the physical location of a product in food, retail, healthcare industries etc.)
▪️and many more

This means that 99% of today’s altcoins and their respective use cases can be run entirely on the Bitcoin Network. Which through sidechain-technology is now both a faster, cheaper and more secure alternative to Ethereum. All of this stuff made Ethereum great and led to the 2017 ICO boom — yet now Bitcoin can provide as well. But is this where the magic ends? Not in the slightest, with the introduction of RIFOS the next step in achieving mass adoption is taken.


2. What is RIFOS?

Image 2: RIF logo

The Rootstock Infrastructure Open Standard (RIF OS) is an entire new infrastructure network built on top of RSK. Thus, the team behind RSK does not only offer smart contracts on Bitcoin but also something akin to Amazon Web Services or Google Cloud. All offered services are built and used from the development community, powered by their RIF token (Rootstock Infrastructure Framework).

AWS is a secure cloud services platform, offering not only computing power, but also database storage, content delivery and other functionalities to help businesses grow and develop. RIFOS acts in much the same way.

RIFOS enables developers to use their computing engine or other services which are built by the development community for Dapp development. Just like AWS or Google Cloud power 90% of todays apps on browsers and smartphones — we can expect RIFOS to power a lot of dapps coming as well.

RIFOS makes building Dapps on Bitcoin both quicker, cheaper and more accessible for everyone

The RSK Name Service, RIFOS’ first building block

Now this is where it gets technical a bit and is only really interesting for Dapp developers. Nonetheless it is noteworthy to mention as this is the part of the foundation RIF Labs is building to enable the hosting of Dapps on Bitcoin.

Recently RIF Labs announced the RSK Name Service (RNS) for public use and is the first implementation of their new infrastructure model. The naming service easily allows users to identify relevant sources like RSK addresses, public keys and social network handles on the RSK Live Network. Its basically a search engine for anything hosted on RSK. RNS can be compared to today’s DNS service on the internet, but then on the Bitcoin blockchain.

Without DNS we would still be typing IP addresses into our browser to reach a website. The RNS module allows anyone to just type in what they’re looking for instead of hexadecimal blockchain addresses.

In essence it is the very first building block to ensure basic usability on the RIFOS. If we for example imagine a messaging Dapp run via RIFOS, instead of typing in a certain address — you just type in the person’s name you want to message. Note that RIF Labs said they will ensure fair domain registry via the RNS service.

We can imagine stuff like this doesn’t sound sexy, but being able to find certain info without relying on copy-pasting saved addresses does sound like something that would help reduce unnecessary hassle and promote usability on their infrastructure and the entire Bitcoin Network.

Notable partnerships

Oak Node — setting up a node in less than 15 seconds
RIF Labs has a partnership with OAK Node, which is a cross-platform solution that enables the hosting of a node in less than 15 seconds without any coding knowledge required. The CEO of OAK Node said:

“We’re thrilled to partner with the inspiring team behind RSK to support the growth of their network. RSK’s smart contract protocol is a major driver of the value economy, and we’re bringing powerful and simple developer tools to RSK and RIF OS. OAK will help grow their distributed infrastructure, hosted by real users, and we can’t wait to see what their community builds.”

BitGive — the first Bitcoin nonprofit
Besides a partnership with OAK Node, RIF Labs also partnered up with BitGive, which is the first Bitcoin nonprofit recognized by the U.S. government. The organization aims to bridge the divide between the blockchain industry and its practical applications for humanitarian and nonprofit work. Most notably, the founder of BitGive announced they will roll out one of the first dapps using RSK technology on the RSK mainnet.

Other ecosystem partnerships are planned and will be made to accelerate the growth of the RIFOS. Start-up accelerators, incubators, education programme providers, event organisers, etc. are among those mentioned in the whitepaper. For a complete list of partnerships click here.


3. Clearing the confusion of the what, why and how of the RIF token

Where does the confusion stem from?

A lot of confusion stems from the fact that RSK apparently needs another token now. But this has everything to do with the introduction of their new infrastructure, RIFOS. RIFOS, which is built on top of RSK, offers a lot more services besides smart contract functionality. If you build a dapp for Bitcoin then you can pay for their services via just one token, RIF.

Hence RIF is a utility token which lies at the centre of RIFOS. Its generation and distribution however will be done through several RSK smart contracts.

TL;DR:
1. RBTC is merely used as gas and incentive for miners for Bitcoin smart contract processing. 
2. RIF is used by third-party developers to pay for the consumption of RIFOS services and incentivize development of Dapps on Bitcoin

The RBTC coin and its utility

“But wait, didn’t RSK also have a native coin called RBTC?” Yes it does, so we can imagine this could cause some confusion. Let’s summarize what the utility of RBTC was again.

Note: in the RSK whitepaper this coin was initially called the SBTC — SmartBitcoins. Do not confuse it with the current SBTC (SuperBitcoin) on CMC.

“The RSK Smart Protocol uses a native token called Smart Bitcoin (RBTC) as gas. This RBTC is pegged 1:1 to BTC, and is used to compensate miners for transaction and contract processing.” All RBTC are created from Bitcoins coming from the Bitcoin blockchain.

The RSK protocol does not mint RBTC, nor does it have pre-mined coins. It has no speculative value and will not nor ever compete with Bitcoin. It is instead fully aligned with the larger Bitcoin community.

When you transfer Bitcoin onto the RSK sidechain, they become RSK’s Smart Bitcoin (RBTC). They are the exact equivalent of Bitcoins circulating on the RSK sidechain. Each RSK can be transferred back to BTC on a 1:1 basis for no additional costs, except transaction fees.

RBTC is merge-mined with BTC in order to achieve similar security levels as that of the Bitcoin network and to ensure miners have aligned incentives.

For processing and executing each Smart Contract deployed, a small fee in the form of gas in RBTC is paid. Note that considering RIF Labs acquired a part of RSK they will also receive a portion of that gas as a form of revenue stream which could scale up quite substantially should Smart Contract usage on Bitcoin increase as well.

Clear, now you know what RSK is, what the function of their coin is as Bitcoin’s sidechain. Now, let’s move on to the token of RIFOS, the layer on top of Bitcoin’s sidechain RSK.

The RIF token and its utility

The RIF token can be used to consume all of the RIFOS services built on top of the RSK Smart Protocol (off-chain). Remember that an off-chain transaction is the movement of value outside of the blockchain.

Image 3: color coded what “currency” will be used for what layer in the Bitcoin Network. D1 stands for the Naming Service which RIF Labs recently launched. It is the first building block within the RIFOS.

The RIF token will also be used in grants, bounties and prizes for the development of specific use cases which RIF Labs might want to promote in collaboration with incubators, accelerators and universities. The RIFOS might also integrate other tools and mechanisms to allow for incentive programmes for companies and developers that choose to use the RIF token for consumption of their services.

All of these decisions and more have the ultimate goal of incentivizing DApp development on the Bitcoin Network and generating a positive network effect for the use of RIF within the Bitcoin ecosystem.

Summarized then RBTC will continue to be used as payment for smart contract processing in the form of gas, RIF will be used to pay for infrastructure services integrated within RIFOS and BTC will continue to be used for transaction processing on lower layers of the stack within the Bitcoin Network.


4. What are the tokenomics of RIF?

Now onto the tokenomics for the speculators among us.

▪️ Max supply: 1 billion RIF
▪️ Circulating supply: exact numbers are unknown but roughly 35%-40% of the max supply

These tokens are already created at the “Token Generation Event” on November 9, 2018. No public sale took place, only a private sale. A softcap of 15,000 BTC and hardcap of 20,000 BTC +/- 10% was planned.

Total amount raised and price per token is private and the team is not making this info public at present.

Token allocation:

▪️ 35–40% allocated to private sale contributors
▪️ 40% kept by RIF Labs, unlocked at a rate of 1/60th every month for 5 years after the token sale ends. Unlocked tokens will be used to promote and increase adoption of RIFOS.
▪️ 20% distributed to RSK Labs’ shareholders, founders and management team as consideration for the acquisition of all RSK Labs’ assets and IP. These tokens are unlocked at a rate of 1/48th every month for 4 years after the token sale ends, with an initial cliff of 6 months. This means the first 6 months no tokens are unlocked.
▪️ 21 million RIF will be reserved as a bounty for early adopters of RIFOS through early adoption incentive programs.


5. How does it all bridge together & why is Rootstock considered a game changer?

The RIFOS takes away a lot of headaches by providing ready-made software packages to help developers easily deploy apps on top of Bitcoin. Now, why should you care about this? Simple, we believe that the RIFOS could play a central role in ushering mass adoption into this space. This has everything to do with the development of Dapps and why we have barely seen any successful Dapp so far. At this very moment most Dapp developers need to build their own computing engine, storage layer or naming service every time they’re thinking to develop a Dapp. Which as you can imagine is a giant hassle for Dapp development.

This article explains very well what the advantage of the RIFOS in this case is. A typical AI dapp would need services which is offered by multiple blockchains, each with their own token. This would mean that building a Dapp requires paying for services with ten different tokens for example. With RIFOS you only need one token, RIF.

RIFOS could be compared with the tech suite that powers all apps on the Google Play store.

All of the components of the RIFOS should run smoothly and is integrated on top of RSK, protected by the most secure network in blockchain, Bitcoin. Dapps built on Ethereum can also be migrated to Bitcoin with minimum hassle through the RSK smart contract engine.

Finally, while RIFOS offers a viable alternative platform for DApp developers, it is not a winner-takes-all solution. The team behind it all notes that the industry is better off if there are several strong blockchain and development ecosystems for developers to choose from. Let’s thus hope that RIFOS will be one of them.

RIFOS vs Counterparty
Note that there is also another project which attempted to accomplish what RIFOS does, this project is called Counterparty and has been several years in development. The general consensus on that project is that it overcomplicates things. Here are some of the grievances people have with Counterparty and we would suggest taking that one a read if you’re familiar with Counterparty. One of the suggestions was to make it more lightweight, modular, on Bitcoin or via a two-way sidechain linked to Bitcoin. RSK + RIFOS fit that bill very well.


6. Looking into the future: how does RIF Labs aim to further tackle the Bitcoin scaling problem?

Sure, all of the above sounds great and all but true adoption won’t take place unless we find a way to make Bitcoin more scalable. The general consensus is that scalability is one of the biggest problem right now and it looks like RIF Labs also got this covered. Here is one of the approaches RIF Labs is investigating in order to tackle this issue.

Currently Bitcoin’s network can only support around 100 million transactions per year, with the processing capabilities ranging between 3–6 seconds per transaction. RIFOS estimates that with this low TPS, Bitcoin can only support payments for approximately ten million users. While Ethereum made some improvements, they can only triple the capacity — which is still not enough to support mass adoption of public blockchain technology.

And so at RIF Labs they are exploring several solutions to make the Bitcoin blockchain more scalable. One of these solutions is through a data compression technique called Shrinking Chain Scaling. The chief architect behind this design improvement is Sergio Demian Lerner, chief scientist of RSK Labs and known for working on the Bitcoin core node.

Shrinking Chain Scaling

Lerner talked about Shrinking Chain Scaling during Binary District’s ‘Off the chain’ master workshop. In which he asked the audience: “If the blockchain is edited without breaking consensus, does it still make a sound?“. The idea proposed behind Shrinking Chain Scaling is that we don’t need all nodes to have the same blockchain information, just the same meaning. In essence, to be in consensus. Sergio says that we can go back in time and edit, correct or compress the blockchain while still being in consensus. This is what he believes Shrinking Chain Scaling makes possible.

SCS enables the compression of data and propagation of this “shrinking” to the network post facto — which is fancy latin for “done afterward”. This means the data is already hashed into the Bitcoin blockchain, and only compressed afterwards. This has numerous advantages over shrinking beforehand, which we’ll dive into a bit later. A bit more complicated, technically it works as follows:

Three types of nodes are created to make shrinking possible.

1)Tip-synched nodes are nodes that are in real time syncing all information and validating every transaction over the Blockchain.

2) Delayed nodes still process the entire blockchain, ensuring every transaction is correct. But these receive compressed blocks, not the full blocks.

3) The third node, ‘Compression proofs generation node’, provides economic incentives for the compression of the blockchain while creating proof. Lerner noted that if compression should be mandatory, miners could also be instructed to compress the Bitcoin blockchain.

Image 4: Theoretical node model in enabling compression of blockchains

In the future a whole branch of the blockchain can be compressed into a single piece of data. Or just a block or even smaller by only compressing certain transactions.

Right now to save a lot of blockchain space is through compressing signature aggregation (you might also recognize this as the Tx of a block). There are a lot of benefits in doing this afterwards rather then when the block is mined. For example, certain information (like the signature part of the transaction — the tx) could be deleted if one chooses so.

Image 5: conceptual model of Tx data removal

Let’s try to explain this conceptually by looking at image 4. Take the first block in the image, this is going to be analyzed. Someone may decide to compress this block by deleting a certain Tx. This info is not deleted right away, but marked first. During this window the chain waits for some proof that this Tx can indeed go away. Only after an amount of blocks pass the info will be deleted.

Why is compression (post-facto) important?

This has everything to do with saving costs, not space. Lerner outlined the costs of running an optimized node for the RSK/ETH full node in Azure or AWS. Which sums up to:

Image 6: Cost of running a node

If certain signatures need to be compressed before they go into the block then multiple problems arise, among these:

▪️ delayed payment
▪️ unscalability to thousands of users;
▪️ susceptibility to DoS attacks
▪️ Requires reputation or identity (or PoW)
▪️ Reduced privacy

The susceptibility to DoS attacks arises from the fact that compression is “free”. Having thousands of transactions instructing for compression would open the chain up to DoS attacks — which we don’t want. By pre-paying your transaction with ALL your data this problem is solved. When data is compressed you get a part of the previously paid fee reimbursed.

This is but one of the avenues Lerner and RIF Labs are exploring right now in making the blockchain more scalable, but it is promising such a bright mind is actively working on Bitcoin, RIF and the road to mass adoption.

Note: Sergio Demian Lerner has co-founded 7 technology companies: RSK Labs, Coinspect, Coinfabrik, WayniLoans, ASICBoost, Identiva Security and Pentatek. Lerner also worked on improving the security of Bitcoin Core by discovering and reporting 9 vulnerabilities. He also proposed over 50 design improvements for greater privacy, interoperability, decentralization, scalability and faster payments on the Bitcoin Network.

7. Summary

We tackled a lot of info here. We discussed the main fundamentals of Rootstocks RSK and the role RBTC plays within Bitcoin’s first sidechain in the form of gas for processing Smart Contracts. Furthermore we discussed the layer on top of RSK called RIFOS and why this should ease Dapp development on Bitcoin and promote mass adoption.
The main point you need to take away from this article is how both RSK and RIFOS are considered meaningful upgrades to the Bitcoin network. And with the wealth of experience and knowledge the teams brings to this project we are bound to hear more from them.


To stay up to date with RSK and RIFOS please join the RIFOS Telegram channel: RIFOS Telegram

Additional Links:

RIFOS Website | Github | Getting Started on RIFOSDocumentation | RIF OS Whitepaper | RSK Whitepaper | RIFOS Telegram | RSK Telegram | Torque Ventures WebsiteTorque Lounge Torque Announcements


Disclaimer : All articles and information provided by Torque are for general information use only and is not an offer nor a solicitation to invest or commit in any way in any of the projects or companies referred or presented to herein or to enter into any contractual relations, nor an advice or a recommendation with respect to such projects or companies. It is prepared strictly as general information and news for the public.

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