This is open source software. Even considering stealth development of a rogue sidechain, the moment they commit the code to a sidechain, the code is out there for everyone to see.
the SC doesn't have to be rogue. it just has to be better.
once it's determined the SC is better, the scBTC become more valuable than BTC. the arb can't work b/c the SC chain is superior and therefore the scBTC are worth more than the BTC. those who moved first will be in a better position. once other BTC holders detect this, they will start to migrate to scBTC. but the catch is: there's a cost to do so. mining fees.
once miners detect this migration they will raise their fees to extortionist levels. they have to b/c accepting a devaluing BTC is risky.
the reason this is more dangerous than simple altcoins is that you're building a system where there is a temptation for miners to merge mine these SC's thus providing them with the security they need to get up and running. we know from Peter Todd that Hill has been aggressively attempting to get mining pools to support SC's.
A better scBTC code will be open for everyone to review the moment it is commited to a SC
Pieter Wuille, bitcoin core developer
What we hope to accomplish is allow more innovation in the Bitcoin ecosystem, without needing a different currency.
If anyone premines (or otherwise inflates, even after the creation) coins on a sidechain, it would need to be encoded in the sidechain's rules. It seems unlikely people would move their assets to such a sidechain, and likely that even if there were benefits to using that sidechain, someone would simply fork it to remove the undesirable inflation. So it seems rather pointless to even implement - we certainly aren't planning to.
Assuming someone does come up with a scBTC that is so evidently superior it could precipitate a mass exodus off the parent BTC chain they will most certainly end up creating an actual altcoin using their chain as the parent chain.
This is because this new chain can only achieve Bitcoin's chain security if all nodes and hashing power switch over. A sidechain is inherently less secure than the parent, BTC blockchain.
This, I believe also nullifies your concern of mining pool "hijacking" transplants.
To entertain your scenario the network then would be left with two options to consider. Remember Good Money drives out Bad Money :
1) The hypothetic Blockstream "pre-mined" altcoin
2) The community fork of the exact same altcoin with fairer distribution (hint : 1:1 peg)
Remember that a Bitcoin-like first mover advantage is inexistent in that case because of the open source development.
Merge mining is a perfectly normal process and it can be extremely beneficial. Providing (almost) the same network security of BTC to altchains is a valuable and noteworthy contribution to their own development. What you seem to forget is that does not benefit them with the same network effect.
Name me one altcoin that people would undoubtedly switch over to if it profited from Bitcoin's network security?
I have spent some time reading the Reddit AMA and I'm sorry to say but it was disappointing to witness the childish stubbordness in your numerous comment in the face of considerably knowledgeable adversity. Your back must be aching from all this heavy lifting cause there were some serious moving of the goal post. You were corrected many time for different false assumption that you keep spreading around on this forum which I consider very concerning misinformation.
The Blockstream team has made it CLEAR they have NO interest into alternative currencies built on a sidechain. This is absolutely not their vision of sidechain and it is explained repeatedly in the white paper.
Adam Back
sidechains are a generic extension mechanism. we hope many people make use of the sidechain extension mechanism to add innovative new features centered around the bitcoin currency.
