Private Subnets

It would not be hard for some (FX) banks to clone Nano and make a private network but that would be making a new coin. I was thinking about how to bridge the networks, to ensure value stays locked in the main net. I'll pitch my half baked idea and then try to explain the parts.

Lets say a group wants to transact privately on a Nano subnet. They make a main net multi-sig account where each member has part control. Each member then loads up a *subnet node and sets the main net multi-sig account as the genesis account for the subnet. They transact as normal. When a person wants to send funds back to a main net account, it requires the multi-sig sign off.

*Subnet nodes are basically cloned Nano nodes with a couple modifications. They would have to allow linking of genesis account to the main net account. The subnet genesis account would essentially be the main net multi sig account. Everytime funds are added/subtracted to the main net multi-sig, funds are also added/subtracted from the subnet genesis account.

Nano private subnets would allow for TPS parallelization and privacy all while keeping value tied to Nano main net.

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Being able to add and remove funds from a subnet with a token that varies in value in relation to Nano would defeat the purpose of a cryptocurrency.
It would be better for a internal network to use regular APIs and Databases than to use a distributed network and a block based ledger...

Interesting idea. I've been thinking for a while about how to divide Nano into "regions" while keeping coins fungible and easily transferrable between those regions. A multisig genesis account for a subnet/region might be a key part of the puzzle.

Hmm let me add a couple thoughts to try and clarify. In this setup funds never leave main net, and main net is unaware of subnets. All main net sees are funds stored in a multi-sig account. The subnet operates exactly the same way as normal Nano main net, except the total token supply fluctuates 1-1 with the main net multi-sig account. Subnet tokens are backed by main net.

The main tradeoff is requiring more trust for privacy. Whoever holds the main net multi-sig keys essentially owns the subnet. Ideally each subnet member has part of the multi-sig key. Also this setup only makes sense for transacting frequently with the same people/companies (FX banking in mind).

This pretty much sounds like a solution, in which people forfeit the benefits of a decentralized peer-to-peer network to participate in a centrally controlled subnet by sending XNO to the multi-sig bridge.
I see how this can increase total TPS by offloading tx to the private subnet and utilizing two networks.

What I fail to see is how this is increasing privacy. Tx on the subnet are public, right? So everyone can look at the private subnet and tie tx to the mainnet by inspecting the bridge.
I may be missing some points, but it looks like an invitation for rug pulls, unless the private subnets are run by trustworthy entities, who insure the funds.

All in all that sounds pretty cumbersome and expensive compared to just using the NANO network in the first place.
Why not stay on the NANO network, have a wallet for deposits and withdrawals and handle tx in that "subnet" through a central database instead. This grants even more TPS and is just as centralized as the solution with a multi-sig bridge for which the subnet operator holds the keys. This would make some level of privacy possible on top.

This idea would be for corporations and 'big banking' needs. I've been thinking specifically of FX trading scenarios with large, trusted institutions. Average Joes would not be doing this.

Lets say 10 big FX banks want to use this subnet solution. As long as each bank gets part of the multi-sig key no one can rug pull the others. Also since each subnet member is known and trusted, they could run the subnet on a VPN. So it creates a closed network, but each token is backed by main net Nano 1-1.

Why do this though? It minimizes risk that comes with using main net directly. Since each subnet member is known, there would definitely be legal liabilities. Also the subnet is completely isolated (except the multi-sig bridge). In some extreme case if main net goes down, the subnet could operate as normal. They could also make each subnet node beefed up for faster, consistent TPS. Main net gets off the hook for processing this assumably large TPS volume as a side bonus.

But again why bother with Nano at all, why not a DB solution? Because trust. Who would own and run the DB for an international solution? Its why SWIFT exists but its far from perfect. The simple answer is Nano is cheaper, faster, better.

The same entity who would operate the multi-sig bridge would then operate the wallet and DB. I see no advantage, but disadvantages of said subnet.
Why exactly has a subnet with a centralized multi-sig bridge a trust advantage over a wallet/DB solution?

The purpose of a multi-sig account is that it cannot be controlled by one entity. In the example of 10 FX banks, each bank would have part of the multi-sig key. So the subnet is run and owned by the 10 banks. Anyone else using the subnet would have to trust those 10 entities. The multi-sig bridge is decentralized between those 10 then, and any funds moving in and out would require sign off from all parties.

For international cases no one would use a central DB anyway. Thats why SWIFT exists as a way to 'sync' DBs with instructions for a transfer agreement. Nano does that better with a decentralized ledger. Even local banks in the same country don't use a shared central DB. I should know b/c I worked at one as a backend dev lol.

Main net vs subnet hassle? Less risk, more legal accountability, enforced node specs, private network, backed by real Nano.

So you basically want to make Lightning Networks (security down the drain) for Nano...

The only comparison to Bitcoin LN is that main net funds get 'staked' or 'locked' into the 2nd layer. And thats the whole point of this thread, to bridge the networks and transfer value between them.