This article is a re-post from the original published in Money On Chain's Medium.
Money On Chain is the first Bitcoin-collateralized stablecoin with no counterparty risk, and there are many reasons for which we believe this is good, but in order to work it needs features currently not available in the Bitcoin protocol.
To fulfill those features we have chosen the RSK platform (aka Rootstock).
In this article, we describe the most important reasons behind the decision.
RSK is built from the ground up as a permissionless open blockchain run by an open-source platform, without this we wouldn’t even consider it as an alternative.
As a stablecoin our purpose and intended use are different from the ones provided by any solid cryptocurrency, including Bitcoin, and one of the main expectations we have is to process thousands if not millions of transactions on a daily basis.
To achieve such volume of transactions, we will initially rely on the faster transaction rate provided by RSK’s shorter period between blocks (that can be as fast as one block every ten seconds), and later we plan to use RSK’s Lumino Network and its Lumino Transaction Compression Protocol that increases the on-chain transactions per second capacity and can be used for off-chain transactions as well.
Using Bitcoin as collateral needs a network that can secure the collateral as safe as the Bitcoin network does, and in the case of collateral locked by a smart contract, we also need one that can ensure its proper execution.
Once again RSK is the best option by far, and the only smart contract platform in the world that is secured by the most powerful miners available: Bitcoin Miners.
By means of a technique called “merge-mining” in which Bitcoin miners can mine for both Bitcoin and RSK blockchains without impact in their hashing power, we can leverage the Bitcoin mining hashrate and get its provided security.
Two of the key components of the Money On Chain design are the DoC token (aka DollarOnChain) which will be the stable token and the BPro token (that will absorb the volatility). Another one will be the MoC token itself that governs the DAO.
These tokens alone won’t do much unless they’re orchestrated by a set of rules that run the system. Those rules will be written in smart contracts that will be run by RSK outstanding feature: Smart Contracts for Bitcoin.
Money On Chain is built with Bitcoin values, both in terms of collateral and philosophy, in part because it was founded by long time bitcoiners that deeply understand which attributes differentiate Bitcoin from most cryptocurrencies if not all. Fortunately, time is proving us on the right path.
We saw that in order to build something that could be useful and cause a real impact we needed to do it on the shoulder of giants, adding to Bitcoin what we think it is missing and at the same time increasing Bitcoin’s value by doing so.
We think that RSK shares these values as well.
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Written by Esteban A. Maringolo, team member of MoneyOnChain.