Sidechain

Written by Max Hinchman

Introduction

A sidechain is a separate blockchain that is connected back to its main blockchain through a two-way peg. Sidechains are being developed as part of the solution to improve is to scalability on blockchain networks. Sidechains enable transactions off of the main chain and it enables locking and unlocking of assets.

The user must first send the coins from the main chain to a specific address so the coins cannot be spent elsewhere. Once the transaction is verified and communicated across chains, the user must wait for set period as an added security measure. Once the waiting period is completed the coins are released back on the sidechain. The same process is repeated when moving the assets from the sidechain back to the main chain. The process of moving assets from the mainchain to sidechain is overseen by a federation, or a group of servers that act as the supervisors.

A benefit of sidechains is that the security that sidechains provide because it is essentially its own chain with its own security. A sidechain is maintained by its own group of validators so any problems that occur in the sidechain are isolated to the sidechain. Similarly, if the mainchain experiences security issues, the problems are isolated the main chain. The main problem with a sidechain is that if there isn’t enough miner power, the sidechain is at risk of hacking. Also, the need for federation to verify the moving the assets, is at odds with the goal eliminating trusted third parties.

Suggested Reading

What are Sidechains by Shaan Ray

Difference between SideChains and State Channels by Viabhav Saini

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