Non Fungible Tokens on Side Chains

Thinking Out Loud

Recently I gave an interview with @theycallmedan talking about DLUX and some use cases. Some questions at the time I answered about NFTs and some of the security concerns with housing tokens on a DLUX side chain and I answered with a little bit of hesitancy about general security issues. Namely, the value of items on a chain can't really exceed a Proof-of-Stake threshold. Dan and I have talked a bit more about this and it's forced me to look further into this security/game-theory and further define the reasons behind these different security limits.

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Where the above holds true is when your side chain is controlling something off chain. For instance a multi-signature account. The biggest reason is once a multi-signature account sends off a transaction it's irreversible for all intents and purposes. The same is true if the accounts are controlling NFTs on other chains like WAX or ETH. However, anything that's reversible/forkable on the side chain doesn't hit this limit. Meaning if somebody executed a Proof of Stake attack, there is no reason why the community couldn't readjust their balance sheet and kick the offending parties.

For historical context. Ethereum split between ETH and ETC based on a DAO hack. Some people believe code is law, and others (rightly) agree that consensus is law.

I hope this small clarification helps draw the line between these types of attack vectors and encourages you to build communities and assets on side-chains. We can significantly lower the cost of the fees that have slowed to growth of these markets with the right approaches.

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