LIP-0005: Drivechain #21
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LIP-0005 introduces a novel type of Layer 2 solution for Litecoin, where "withdrawals" (transactions from L2 to L1) are governed by proof-of-work rather than relying on a federation or a predetermined set of public keys. This proposal emphasizes slow, transparent, and auditable withdrawals, ensuring they are straightforward for honest users while being difficult for dishonest miners to exploit. The primary design goal of LIP-0005 is "partitioning"—users can choose to disregard LIP-0005 transactions; their L1 experience remains unaffected whether they validate all, some, or none of these transactions. The secondary design goal is "security"—users of the L2 network should have confidence that if the L2 network incurs significant fees, miners will be incentivized to maintain its operations, ensuring that withdrawals are processed reliably. Once LIP-0005 establishes a robust "bridge" between Litecoin's L1 and these Layer 2 solutions, users can seamlessly swap coins in and out, utilizing LIP-0005 solely for final settlement. This architecture allows Litecoin to handle transactions of any type or size, independent of block size, node software, technology stack, or level of decentralization—achieving all this without necessitating alterations to the L1 protocol.
LIP-0005 introduces a novel type of Layer 2 solution for Litecoin, where "withdrawals" (transactions from L2 to L1) are governed by proof-of-work rather than relying on a federation or a predetermined set of public keys. This proposal emphasizes slow, transparent, and auditable withdrawals, ensuring they are straightforward for honest users while being difficult for dishonest miners to exploit. The primary design goal of LIP-0005 is "partitioning"—users can choose to disregard LIP-0005 transactions; their L1 experience remains unaffected whether they validate all, some, or none of these transactions. The secondary design goal is "security"—users of the L2 network should have confidence that if the L2 network incurs significant fees, miners will be incentivized to maintain its operations, ensuring that withdrawals are processed reliably. Once LIP-0005 establishes a robust "bridge" between Litecoin's L1 and these Layer 2 solutions, users can seamlessly swap coins in and out, utilizing LIP-0005 solely for final settlement. This architecture allows Litecoin to handle transactions of any type or size, independent of block size, node software, technology stack, or level of decentralization—achieving all this without necessitating alterations to the L1 protocol.
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LIP-0005 introduces a novel type of Layer 2 solution for Litecoin, where "withdrawals" (transactions from L2 to L1) are governed by proof-of-work rather than relying on a federation or a predetermined set of public keys.
This proposal emphasizes slow, transparent, and auditable withdrawals, ensuring they are straightforward for honest users while being difficult for dishonest miners to exploit. The primary design goal of LIP-0005 is "partitioning"—users can choose to disregard LIP-0005 transactions; their L1 experience remains unaffected whether they validate all, some, or none of these transactions. The secondary design goal is "security"—users of the L2 network should have confidence that if the L2 network incurs significant fees, miners will be incentivized to maintain its operations, ensuring that withdrawals are processed reliably.
Once LIP-0005 establishes a robust "bridge" between Litecoin's L1 and these Layer 2 solutions, users can seamlessly swap coins in and out, utilizing LIP-0005 solely for final settlement. This architecture allows Litecoin to handle transactions of any type or size, independent of block size, node software, technology stack, or level of decentralization—achieving all this without necessitating alterations to the L1 protocol.