Sovryn is working towards the introduction of an ecosystem of rollups built on bitcoin, called Sovryn Layer. With the launch of Sovryn Layer, the SOV token will take on new roles and will need to be reconstituted on BitcoinOS. In other words, for SOV to become a native token in BitcoinOS (alongside BTC), the canonical registry of SOV will need to be a ledger secured directly by Bitcoin. Currently, of course, SOV’s native ledger is the Rootstock chain.
The Importance of a Canonical Ledger
Why does it matter where the token’s canonical registry is? Simply put, the main function of a blockchain is to act as a public source of truth for asset ownership - a ledger that can secure ownership and avoid double spending. An obvious example of this is that if you hold a BTC balance on centralized exchange, you don’t actually own the BTC, they do. An even more relevant example are cross-chain bridges. When you bridge an asset to a different bridge you create all sorts of risks - frequently exploited - because there is no single source of truth to prevent double spends (thefts, hacks, rugs).
Coming back to SOV, if it is to be a native, trustless governance token in the BitcoinOS ecosystem, it can’t be bridged from Rootstock and can’t be registered in two places at once.
Transitioning a Canonical Registry
Bitcoin is going through a metamorphosis right now. Unlike sidechains, the systems that are being rolled out - native token protocols and rollups - are not separate chains but part of a new, interoperable, and backwards compatible ecosystem. This is a one-off process. Once we transition SOV’s canonical registry to this system, we will never need to have a forking change again. However, because SOV is currently on Rootstock, transitioning it to BitcoinOS is a forking change.
The question becomes, how can we make this forking change with as little disruption as possible?
First some terminology: For the purposes of clarity, I will refer to BitcoinOS SOV simply as SOV. Rootstock SOV, which is the alpha iteration of SOV and is currently referred to as SOV, I will refer to as rSOV.
We need a plan that accomplishes several things:
When Sovryn Layer launches, SOV will be immediately available to be used for staking and any other purposes required by the new chain.
The value generated by Sovryn Layer accrues to SOV stakers.
We do not create a perverse set of incentives that discourage Bitocracy staking on Rootstock, during this process.
I can envision several ways in which the transition could happen. Just a few examples: We could fork Rootstock to become a BitcoinOS chain (this currently seems unlikely). We could make use of one of the emerging bitcoin-native token protocols, and allow a gradual burn (rSOV) and mint (SOV). We could issue SOV on a Sovryn rollup and allow for it to be bridged back to Rootstock. I’m sure you can imagine other scenarios.
Until Bitocracy decides what the transition process will be, we should proceed such that we keep our options open. That said, we should begin preparing for the transition process now.
To achieve the above requirements, I propose that we institute SOV staking rewards similar to those that were introduced by SIP-24. rSOV stakers will begin to earn SOV. This SOV will be provided in the form of non-transferable placeholder tokens. The advantage of these tokens being non-transferable is that it will provide maximal flexibility going forward. With the launch of Sovryn Layer these tokens will become available, the first canonical SOV tokens to be issued and/or liquid.
I expect to publish a SIP in line with this proposal soon. I look forward to your comments, thoughts and contributions, so I may incorporate them.