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Is Segregated Witness a step in the direction toward implementing pegged sidechains into Bitcoin?

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  • From what I understand, RSK for example, is a pegged sidechain and is implemented without segwit. However, its implementation requires additional trust (to 3rd parties like exchanges etc.). My understanding is that this would not be needed using segwit. So, no,segwit is not needed, but then additional trust on 3rd parties is required.
    – epson121
    May 25, 2017 at 21:13

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No.

Federated pegging solutions already exists, and some are being deployed in production. This approach relies on having a number of trusted parties that hold the pegged coins on the main chain side until they get pegged out from the sidechain again.

If you're talking about SPV merged-mined two-way pegged, SegWit does not matter. In this approach, the trusted federation is replaced with a hashrate majority signing off on transfers back. It requires support in the main chain for counting miner votes or support, and several proposals have been made. They are not part of SegWit, though.

The downside of the latter approach is that a hashrate majority on the main chain is always capable of stealing the sidechain's coins, as they could simply sign off on an unauthorized transfer. Technology exists (SNARKs) that could one day allow us to build a sidechain where the main chain can fully validate the sidechain's action, but right now, it is computationally infeasible to do so.

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