Sidechains are a scaling technology that allows digital assets to be safely used in a different blockchain and moved back to the original. Sidechain techniques have great potential to enhance the capabilities of existing blockchains.
Analogy: "Before understanding about sidechains, first understand this analogy on main chain and sidechains. Imagine the main chain as a national highway where vehicles can run and sidechains as the connecting roads joining the highway to cities. The connecting roads (sidechains) can lead vehicles to national highways (main chains) whenever needed." ~Akeo
Original blockchains are referred to as the ‘main chain’ while additional blockchains are referred to as ‘sidechains’. Sidechains increase transaction speed and lower the cost of transactions on the main chain.
A user must first send coins to an output address where they will be locked so that the user cant’ spend them. Once the transaction is completed, the message is sent across the chains and the user has to wait longer for extra security.
Once the waiting period is over, the equivalent number of coins is released on the sidechain, allowing the user to access them. The reverse happens when moving back to the main chain.
Picture sidechains as an extra burner on a cookers. Instead of waiting on one burner to make several meals, you can cook each meal side by side to save time.
How Do Sidechains work?
Sidechains are used primarily on two blockchains, Bitcoin and Ethereum since both of them experience bandwidth issues.
A few years after its launch, Bitcoin started becoming "overwhelmed". Several crypto projects emerged offering speed and lower transaction fees.
Developers of blockstream introduced the idea of side chains in 2016, which would solve the problems of Bitcoin.
They introduced a way of creating a separate blockchain that will be bonded to the main blockchain and be able to transfer assets.
To use a sidechain, one must first send coins to an address. The coins are temporarily held for verification, for the purpose of prohibiting double-spending.
After the transfer is confirmed, the coins are moved to the sidechain where they can be used freely. If the coin holder desires, they can send them back to the main blockchain.
Types of Sidechain Platforms
1. Rootstock (RSK)
Rootstock has its own open-source testnet called Ginger for its sidechains. It works with the Bitcoin blockchain and rewards miners through merged mining.
Rootstock aims to have Bitcoin work like smart contracts and make payments faster.
2. Polygon
The Polygon sidechain is a stack of protocols designed to fix a blockchain’s scalability issues. It works on the Ethereum network.
The network addresses the challenges of the blockchain by handling transactions on a separate blockchain that is tied to the main blockchain.
Polygon, which was formerly known as Matic network, provides an easy framework for new and existing blockchain projects to be built on blockchain networks without scalability issues.
Through Polygon, users can interact with any decentralized application without having to worry about congestion on the network.
Security of Sidechains
Sidechains allow cryptocurrencies to work together. They introduce flexibility and allow developers to test software updates before putting them on the main chain.
However, security remains an issue on sidechains because they are responsible for their own security. Since each sidechain is independent, when it is hacked, the damage won’t affect the main chain.
Similarly, when the main chain is compromised, the sidechain will still operate, only the peg will lose a lot of value. Also, sidechains are less secure because of the limited decentralization.
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